Tag Archives: networth

Estimated Tax Worksheet – could it be any more complicated? (Don’t Answer That)

Ok, going by the estimated tax worksheet, perhaps I owe a different amount for this quarter.

1. Adjusted gross income you expect in 2008:

(Adjusted gross income. Use your 2007 tax return and instructions as a guide to figuring out the adjusted gross income you expect in 2008. see Expected AGI — Line 1 in chapter 2 of Pub. 505 — “Your expected AGI for 2008 (line 1) is your expected total income minus your expected adjustments to income”)

Let’s just say $66,000 and forget any adjustments I might take.

2. Estimated total of itemized deductions: no idea

3. Subtract Line 2 from Line 1: $66,000

4. Exceptions: Multiply $3,500 by the number of personal exceptions = $0?

5. Subtract line 4 from line 3 = $66,000

6. Tax =
Figure your tax on amount on line 5 by using the 2008 Tax Rate Schedules on page 5. *If you have qualified dividends or a net capital gain, or expect to claim the foreign earned income exclusion or housing exlucsion, see “pub 505” to figure the tax.

  • 10% on income between $0 and $8,025
  • 15% on the income between $8,025 and $32,550; plus $802.50
  • 25% on the income between $32,550 and $78,850; plus $4,481.25 = $12843.755
  • 28% on the income between $78,850 and $164,550; plus $16,056.25
  • 33% on the income between $164,550 and $357,700; plus $40,052.25
  • 35% on the income over $357,700; plus $103,791.75

7. Alternative minimum tax from Form 6251: (this AMT confuses me to no end so for now I’m going to pretend it doesn’t exist and hope it doesn’t effect me.

What is the AMT? The AMT came into being with the Tax Reform Act of 1969. Its purpose was to target a small number of high-income taxpayers who could claim so many deductions they owed little or no income tax. A growing number of middle-income taxpayers are discovering they are subject to the AMT.

8. Add lines 6 & 7. Add to this amount any other taxes you expect to include in the total on Form 1040, line 44, or Form 1040A, line 28 = $12843.755

9. Credits (not not include any income tax withholding on this line): huh?

10. Subtract line 9 from line 8. If zero or less, enter 0 = $12843.755.

11. Self employment tax. Estimate of 2008 net earnings from self employment. (if $102,00 or less, multiply the amount by 15.3% — Caution: If you also have wages subject to
social security tax, see Pub. 505 to figure the amount to enter) = $10,098

12. Other taxes (see instructions below): let’s just say none.

13a. Add lines 10 through 12: $10,098
b. earned income credit (forms 4136, 8801 (line 27) and 8885) – None (you have to earn less than $17k for this.)
c. total 2008 estimated tax. Subtract line 13b from line 13a. If zero or less, enter 0 = $22,941.755

14a. multiply line 13c by 90% (unless you’re a farmer or a fisherman, then it’s 66.5%) = $20,647.58
b. enter the tax shown on your 2007 tax return (110% of that amount if you are not a farmer or a fisherman, and the adjusted gross income shown on that return is $150k or more) = no idea yet
c. required annual payment ot avoid a penalty. Enter the smaller of line 14a or 14b = $20,647.58

15. Income tax withheld and estimated to be withheld during 2008: none.

16a. subtract line 15 from line 14c:
Is the result zero or less?
Yes — stop here. you don’t have to pay anything.
No – go to line 16b…

16b: subtract line 15 from line 13c
is the result less than $1000
yes – stop. no money needed.
no – go to line 17 to figure your required payment

17. if the first payment you are required to make is due april 15, enter 1/4 of line 16a:
$20,647.58 / 4 = $5161.89

(but this doesn’t at all include state taxes. I wonder if there is a separate quarterly estimated tax payment for that.)

State Income Taxes: Why California Sucks

When I headed west and moved to California a little over two years ago, I was fresh out of college and not at all worried about taxes. All I wanted was to move away from Chicago’s bitter cold and into the Cali sun. At that point in my life I figured I’d be lucky to ever make $20k a year, and being in such a low income bracket, the income tax amount from state to state didn’t make much difference.

Actually, at the time I didn’t even realize that there was a difference per state in terms of income tax levels. I just thought that everyone in any state paid the same amount for state and federal taxes, just that the state taxes went to the state you lived in and federal went to Bush and his war.

Apparently – that’s not correct at all. (Duh, me.) Each state has its own state income tax. Just my luck, California is the worst for income tax rates at my level of earnings.

Even New York and my home state of New Jersey would be cheaper when it comes to state taxes (although they’re both ranked highly in the list of “expensive income taxes.”)

For a yearly income of $50k – $60k (which is about what I expect to bring in over 2008)…

My state income tax rate & fee,
assuming an annual income of $55k:

California — 9.3% or $5115
New York — 6.85% or $3767.50
New Jersey — 5.525% or $3038.75

I’m surprised at how expensive it is to live in Maine. 8.5% for anyone making $17k or more. Yikes. Who really wants to live in Maine anyway?

Talking Taxes

My taxes for 2007 are going to be a total nightmare. I tried to figure them out on TurboTax a few months ago before getting my official W2s, but I’m afraid I’m missing major deductions that I should be taking (or taking deductions I shouldn’t be taking).

That has led me to seek out a CPA. So far the one who has written back to me charges $155 an hour with a two hour minimum. Eeks. And I thought $80 for TurboTax was pricey.

While $310 for an accountant to do my taxes won’t be the end of the world, it still sucks. I feel like I should be able to figure out taxes for myself given that my overall earnings for the year was less than $35k. Unfortunately that $35k came from a bunch of different places.

Meanwhile, my uncle – who I do some small amounts of freelance work for – told me that while he’s not sending me a 1099 form I have to report the earnings. Of course I have to report the income, but I thought that he also had to report the earnings. So I’m a bit confused about this – if he doesn’t report the earnings will I get him in trouble if I report them?

Do you guys think it’s worth $310+ to have someone prepare my tax returns? Or should I just do TurboTax and hope that I don’t majorly mess anything up?

March 1-20 Spending ($3176.93)

March Spending Breakdown Check In (March 1 – 20)

Fixed Costs = $1422.28
————–
$71.33 — Cable Bill
$129 — Health Insurance
$87.33 — Car Insurance
$57.62 — Phone Bill
$1050 — Rent
$27 — Gym Bill
————–

Gas Totals = $121.30

—————

Color Code

$1543.58 — Fixed Costs & Gas
$387.98 — To Be Reimbursed
$371.16 — Food / Drug Store
$0 — Clothing / Beauty
$105.54 — Furniture / Household
$512 — Investment
$256.78 — Other


———

$2277.06 Spending
$512 Investment
$387.87 To Be Reimbursed
———-
$3176.93 Total March 1-20

————————-
breakdown by type:

Cable / Internet Bill:
$71.33

Health Insurance:
$129

Sharebuilder Investment:
$500

Car Insurance:
$87.33

Play TBR – Tables:
$50

Cash Withdrawl

$50

Cell Phone Bill

$57.62

Gym Bill
$27.00

Rent
$1050

Sharebuilder Fees
$12

Sheet Music for Play (TBR)
$6.39

Drug store
$3.79

Dinner for Two
$28.03

Target – bookshelf and ottoman
$105.54

Quik Stop
$5.07

Drug Store
$13.62

Antiques for Play (TBR)
$15.16

Quik Stop
$7.40

Groceries
$6.04

JoAnn Fabrics (TBR)
$43.22

Home Depot (TBR)
$45.24

Burger King (TBR)
$15.34

Gas
$63.48

Dinner
$11.69

Book
$11.85

Groceries
$14.97

Dinner for Two

$42.40

ITunes – sound for play (TBR?)
$29.88

Taco Bell (food)
$3.38

Bagels for two

$7.10

Drug Store
$63.25

iTunes (TBR?)
$9.99

Ace Hardware ($30 TBR)
$52.34

Target

$32.46

Joann Fabric (TBR)
$20.25

Gift for Boyfriend’s Birthday
$150

Home Depot (TBR)
$89.76

Ace Hardware (TBR)
$62.75

Groceries
$6.99

Gas
$57.82

Groceries
$169.90

March Budget

I start making a good chunk of more money next month at my next payday, but for now I’m going to try to be careful to stay within my paychecks that I cashed today.

$3,700 Total to Spend/Save for March

$1050:
Rent / Utilities
$71.33: Cable/ Internet
$57.00: Verizon Phone
$128: Health Insurance
$138: Car Insurance (paid in advance)
$200: Gas
$27: Gym

SAVINGS

$1000 ING Direct for Taxes Account
$300 Roth IRA
$250 Sharebuilder
——————————
$3083

LEFT FOR SPENDING IN MARCH…

$617

$250 Gift for Boyfriend’s Birthday
$300 Food
$67 Entertainment / Other

…………

March is official “be fucking frugal” month. Next month my income goes up $1500, so there will be a lot more flexibility. Unfortunately my boyfriend’s birthday falls BEFORE that. Well, I’ll take him out to a nice dinner and get him a gift that won’t be as extravagant as last year’s Wii. Oh well. I could invest less in my Sharebuilder account this month if I want to spend more on the birthday, so that’s always an option.

I also hypothetically have another $825 owed to me for one of my freelance jobs and another $300+ owed to me for that cell phone bill that my old company was supposed to pay. So if I actually get paid that money, then I’ll be doing fine. But I don’t know when those checks will come, if ever. If they do come, I’m going to put more towards my Roth, and spend a little more on the bf’s birthday.

The good news is that I won’t have much time for spending money in March. My show opens March 28, which means the major cost of the month will be GAS to get to and from rehearsal at the theater about 30 minutes away. That’s why I put $200 in gas for the month. BUT I’m getting paid $500 to direct this production, after the fact, so my balance is going to look a lot healthier in April. It’s March that will be tight, since I don’t know when any of these other paychecks will be coming in.

Sadly, March is also the month when I wanted to seek out a tax consultant to discuss how to arrange my accounting as a freelancer. But I guess I’ll have to take a stab at figuring out my estimated quarterly tax for Q1 08 by myself. Meanwhile, I also have to file my taxes, but I’ll wait to April to do that, so I have some money to at least go through TurboTax or something.
Although my income last year was pretty low, prob about $34k or less, so maybe I can get away with filing for free. Hmm. That’s for another entry, eh?

The 60 Hour Freelance Work Week

While working 60 hours at a salaried job each week seems beyond boring, diversifying one’s time and one’s ongoing work portfolio can lead to professional fulfillment on many levels, including by not limited to one’s bank account.

I recently found out that in order to be a full-time salaried employee at my current company, I need to sign on for 50-60 hours a week. While I love my job AND the company, that’s still not enough to have me sign every possible work hour away to one job.

Besides boredom, the reason to keep my ‘after 40’ job hours open is because some of my other opportunities pay much better than what I’m spending most of my week on. At my 40 hour per week job I make about $27 an hour right now. But I’m also taking my late evenings to work as a freelance marketing writer, with projects I’m getting paid $50 per hour for.

I’m not sure what my value is as a full-time employee versus freelance, but for some reason I feel like my $50 per hour charge as a freelancer is justified, while I could never imagine asking my freelance full-time employer for such a raise.

When it comes down to it, I’d rather make slightly less at my “day job” and use the opportunity to pitch my writing skills for extra income that ultimately covers health insurance and other things I need.

That brings about the question… how much can I actually make in one month without not sleeping and going completely insane…

Monthly Potential Income
1. $4800 — Gig 1. 40 hours per week (on contract)
2. $400 — Gig 2. Approx 8 hours, or 4 projects per month at $50/hr
3. $250 — Gig 3. 10 hours of administrative Work at $25/hr
4. $400 — Gig 4. 8 hours of research & article writing at $50/hr
—————————————————————————–
$5850 per month

Which is a lot of money. Sort of.

Minus $2340 ((40% taxes (25 % tax bracket + 15 % self-employment tax))) that comes out to a grande total of…

$3510 per month after taxes, or a net income of $42,120 per year.

That’s still pretty good, I think.

Budget Check Feb 1 – 15: $3608.12 (YIKES!)

I’m going to start checking in about my monthly budget half-way through the month in order to figure out what sort of money I have left to spend on things.

Smart, eh? Yea, I know.

Oh thanks for the recommendations about my bf’s gift in my last entry. I’ll be buying him something in a week or so (can’t afford to now anyway) so keep those recommendations coming! ThinkGeek.com is good start. I never know what computer stuff to get him. He doesn’t have Apple stuff yet, so I can’t go that route (tho he’ll buy a Macbook Pro as soon as they release an updated version). He has tons of computer stuff and I just have no idea about what he needs and what he’d want. Oh, food for thought to all of my fabulous gift recommender’s – he loves, loves, loves anything that’s blue.

Ok, without further ado… my poor budgeting for the 1/2 month leading up to today.

Total Spending feb 1 – 15: $3608.12 (YIKES!)

I thought I was over spending this month. I definitely did not realize how much!!!

A lot of the $ has to do with finally getting around to paying late fees on a variety of bills. I also had a little shopping spree this month, which you’ll notice below. It was all at a designer discount store! I even returned some of it!!!

—————–

$1050: Rent
$404.86: Medical
$403.95: Car (three months insurance + gasoline)
$80.28: Phone
$737: Investment / Savings/ Taxes
$345.40: Food – dining out ($87 of this will be reimbursed)
$31.31: Food – groceries
$10.71: keep the change “savings”
$483.53: Clothing & Beauty (incl. hair/waxing/dry cleaning)
$32.46: Entertainment
$28.80: Taxes

—————–

Breakdown…

RENT – $1050
$1050: rent

MEDICAL – $404.68
$146.68: doctor’s bills / medical
$258: Check for AETNA medical insurance

CAR / AUTO – $403.95
$200.6 Car Insurance (dec/jan)
$34.02 gas/auto
$87.34 car insurance (feb)
$50 – gasoline / auto
$10: check for parking ticket #1
$21.99: Gasoline

PHONE – $80.28
$32.46: phone charger
$47.82: verizon bill

INVESTING/SAVING – $737
$100 Investment into Mutual Fund
$600 Transfer to ING Direct (savings) for Tax Season
$25: transfer to prosper account to lend
$12: investing fees

FOOD/DINING OUT – $345.40 ($257.88 after reimbursement?)
$52.72 dining for two – food
$3.50 food
$13.85 lunch for two – food
$2.34 food
$44.87 lunch for two – food
$3.65: food
$28.35: dinner for two – food
$87.52: Pizza for my cast (to be reimbursed?)
$42.68: dinner for two
$5.36: food
$8.39: food
$5.94: food
$30.47: dinner for two
$14.69: breakfast for two
$1.07: food

FOOD/ DINING IN – $31.31
$12.94 groceries – food
$8.25: groceries, food
$10.12: groceries – food

KEEP THE CHANGE SAVINGS — $10.71
$.79 keep the change transfer
$.53 keep the change transfer
$.06 keep the change transfer
$2.35: keep the change transfer
$3.35: keep the change transfer
$2.19: keep the change transfer
$1.13: keep the change transfer
$.31: keep the change transfer

CLOTHING/BEAUTYBUYING — $483.53
$362.58: clothing (returned much of this purchase)
-$255.43 clothing returns (I returned this much and bought the above shirt)
$124.47 clothing: one BCBG sweater (on sale) and earrings
$20: Eyebrow Wax / beauty
$78.20: dry cleaning
$81.19: two shirts – clothing
$96.34: one shirt – clothing
-$23.82: macys returns

ENTERTAINMENT – $32.46
$26.48: magazines / books
$5.98: check for magazine subscription

TAXES – $28.80
$28.80: check for 2002 taxes. Uh, a bit late on that.

New Budget, Now That I’m Making $$$

New Budget

5200

$1300 ING Savings For Tax Account
$300 to ING for Emergency Account
$300 to ING for Grad School
$200 to ING for House
$300 to Sharebuilder / Investing
$200 to Roth
$100 HSA
————————————————
$2400

$1050: Rent / Utilities
$71.33: Cable/ Internet
$48.33: Verizon Phone
$128: Health Insurance
$138: Car Insurance
$100: Gas
$27: Gym
——————————————
$1562.22

=

$1237.78 left for…

food/clothes/car/fun

$400 food / vitamins
$300 clothes / tech
$200 gas
$150 gifts
$100 dry cleaning
$50 laundry
$30 charity
——————-
$1230

Now am I forgetting anything?

——————————-

At the end of the year, from my ING tax account I will pay my taxes. I should not spend all the money on taxes because I’m “taxing myself” at a 25 percent rate for all the money I make, but in the end all my money will not be taxed at that rate.

Any extra money is going towards a Digital SLR camera!!!

Budget – Fixed Monthly Costs

Since I’m oh-so bad at not racking up random late fees on things, here are my fixed costs
and what they should cost me each month:

$1050: Rent / Utilities
$71.33: Cable/ Internet
$48.33: Verizon Phone
$128: Health Insurance
$138: Car Insurance
$100: Gas
$27: Gym
——————————————
$1562.22

Total Set Monthly Income (actual, not dreamed)

$3700

Have to put 25% of that into taxes savings account…

$925 into savings account.

Leaving $2775 for monthly spending
MINUS
$1562.22 of fixed costs

——————————————–

That hypothetically leaves
$1212.78 for food, fun, investing, medical spending, extra gas, etc

A reasonable budget would be:

$400: Food
$100: Invest (roth IRA)
$100: Invest: ETF/Stocks
$200: HSA Account for Medical (Need to Set Up!)
$200: Clothes / Makeup
$100: Extra Gas
$112.78: Entertainment

What am I missing?