Finally We Owe Money When We File Our Taxes

Its taken me forever, but I finally was able to pull all the pieces together this weekend to file my taxes. Its been a long time in the making, but I finally owe the government money when I file my taxes on Monday. Im going to get a $50 refund from my federal taxes and have to make a $928 payment on my NC taxes.

Getting to a point where we owe taxes when we file has taken several years with more activities, various income streams, and dimensions on my growing family's taxes its been difficult to accurately estimate our annual tax burden each year. Truthfully a good chunk of that is laziness on my part. Its just too painful to really crunch the numbers mid-year or so to better estimate of our taxes.

Well we finally closed the gap this year and got to the point where we owe a slight amount of money (<$2k) when we file. Why? Because having the money in my pocket up to a year or more in advance is far better than giving it to the government early.

The one surprise to me was we didn't qualify for the child tax credit this year. Exercising some of my employer stock options in 2010 threw us over the income limit. I also realize we likely won't quality in 2011 either as I have exercised the remaining options this year. Ofcourse its a good problem to have, but given how we are spending most of our take home pay, I don't feel like we are bringing enough in to considered earning enough to have this type of credit or deduction phased out. Ofcourse it is the investment returns, side income, and option sales (not earned income) that have put us in this position of being phased out of the credit.

Related in Income Taxes:

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Comments (6)

It's good that you were finally able to get your taxes together. As an intern with 0 investments and just cash I've already completed my taxes for 2011 (will file next year assuming nothing changes). I dread the day that my taxes become more complicated.

-Ravi Gupta

Is income from rental units subject to tax since it is part of gross income? If so, I'm surprised you haven't had to owe tax before?

Loved the post! I see people very gleeful because they are getting a big refund, but what they don't realize is that they've offered Uncle Sam an interest free loan for a year!

I'm glad you were smart enough to adjust your withholding!

I thought state taxes were due on April 15th while federal taxes are due April 18th.

I'm assuming that most of the time 2milliong ends up with a passive activity loss on his real estate by the time he figures in his operating expenses, interest expense and depreciation. In that case his real estate actually helps ease his tax burden.

This is the first year I ended up with a slightly positive rental income from my taxes, primarily due to paying down the rental mortgages.

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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