There are two really nice sites I use quite often:
1. PriceProtectr: This site has saved me tons of money by letting my know when a recently purchased item goes down in price. Most sites has a 20-30 day price protection where if they price is lowered during that time period after purchase they'll refund the difference. For example, buy a new T.V. at Amazon for two days later they lower it $100, PriceProtectr will email you and you can ask Amazon to refund you the difference (they done if 5 times for me so far). There are tons of sites that they track, but I've only tried Amazon.
2. Yodlee Money Center: I seriously don't know why more people don't know about or use this site. I'm sure most of you have tried or heard about Microsoft Money or Inuit Quicken for tracking finances...and how much they suck! Those products are expensive and do a horrible job of tracking your finances. Yodlee Money Center does most of what Money and Quicken do, but it is online and free. You can track your net worth, spending history, balances, etc. The only point is that you need to trust them to store your user names and passwords to your financial sites. However, Yodlee is used by Chase, Citi, and a bunch of other banking sites, so it probably is fairly safe. At least I hope!
Thursday, February 21, 2008
Taxes - Marriage Penalty and The Alternative Minimum Tax
I have finally received all of the tax forms for my wife and me: W-2s, savings accounts, brokerage accounts, etc. For the past 6 years I've been using TaxCut to do my taxes (one year I tried an accountant, but it seemed that I lost money because he saved me nothing and I had to pay him a lot more than the software cost). TaxCut has treated me well except for making me purchase an extra state when I worked in multiple states. However, this year they jacked up the price quite a bit: $69.99 retail for the state + e-filing. Wow! I might start looking into an accountant if I can find one for $100.
I'm not at the worst part yet! I entered in all of our tax info and followed the upper right hand corner that tracks my refund (or owe!). Enter in my W-2, a grand in refund, enter my wife's w-2, owe four grand, etc. Up and down it goes as I progressed along the screens when suddenly the next button (and the end of credit) caused the upper right hand corner to show us owing around $15,000! I was shocked! I probably spend 2 hours recalculating and doing the numbers by hand. I even found a site that helps you calculate your owed taxes (check it out..pretty helpful).
After going through stages of grief (denial, anger, bargaining [cheating], depression, and acceptance) I finally figured out what is going on.
Three things caused our high tax bill:
1. My wife had a nice tax bill of $6,000 (off setting my $500 refund). This came from her withholdings being too high. We've already reduced them down 2 points.
2. Filing as married, as opposed to single, creates an additional $5000 in taxes. This took me quite a while to figure out, but after doing some calculations by hand and using the above mentioned website I came to the realization that our total is like a single person filing with our total income (technically not as bad, but much worse than two single people filing). For example, say two married people make $200,000 a year each. Filing single, they each owe $52,086. Filing married they owe $112,206...a difference of $8,070. The reason is because you pay only 10% taxes on the first $8,000 made, 15% on the next $22,000, etc. Filing married mostly combines the incomes, thus only one income gets the progressive tax.
3. The Alternative Minimum Tax hit us by filing together. Filing single we wouldn't have been hit by it.
One may ask why not just file as two singles. Legally you can't. You either file as "Married, Filing Jointly" or "Married, Filing Separately." The latter status has even a worse tax hit!
I'm not at the worst part yet! I entered in all of our tax info and followed the upper right hand corner that tracks my refund (or owe!). Enter in my W-2, a grand in refund, enter my wife's w-2, owe four grand, etc. Up and down it goes as I progressed along the screens when suddenly the next button (and the end of credit) caused the upper right hand corner to show us owing around $15,000! I was shocked! I probably spend 2 hours recalculating and doing the numbers by hand. I even found a site that helps you calculate your owed taxes (check it out..pretty helpful).
After going through stages of grief (denial, anger, bargaining [cheating], depression, and acceptance) I finally figured out what is going on.
Three things caused our high tax bill:
1. My wife had a nice tax bill of $6,000 (off setting my $500 refund). This came from her withholdings being too high. We've already reduced them down 2 points.
2. Filing as married, as opposed to single, creates an additional $5000 in taxes. This took me quite a while to figure out, but after doing some calculations by hand and using the above mentioned website I came to the realization that our total is like a single person filing with our total income (technically not as bad, but much worse than two single people filing). For example, say two married people make $200,000 a year each. Filing single, they each owe $52,086. Filing married they owe $112,206...a difference of $8,070. The reason is because you pay only 10% taxes on the first $8,000 made, 15% on the next $22,000, etc. Filing married mostly combines the incomes, thus only one income gets the progressive tax.
3. The Alternative Minimum Tax hit us by filing together. Filing single we wouldn't have been hit by it.
One may ask why not just file as two singles. Legally you can't. You either file as "Married, Filing Jointly" or "Married, Filing Separately." The latter status has even a worse tax hit!
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