Putting Money Aside for 2009 Taxes

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200446241-001.jpgSeeing that it’s tax season again, I’m trying to get our tax documents together to make sure it’s easy when we decide to do them. We always do them ourselves and have my dad check them over. Last year we ended up owing federal taxes, around $1000. I decided that I would have $50 a paycheck withheld for taxes. At that time, I thought that it was the best for us. I guess I didn’t think about saving the money myself and putting it in a separate savings account.

This morning, I decided that I would change that. I logged on to my employer’s HR website and changed my direct deposit information so that $50 a paycheck goes into a separate ING account for taxes. Why should I let the government use my money each month when I can be earning interest on it? True, it’s not going to be a lot, but I feel better knowing that I am in control.

I’m considering doing the same thing for my car insurance, but to be able to do that, I’d have to take money out of our emergency fund to do so, and I’m just not comfortable doing that right now. Of course, if I approach it that I’m paying 6 months at a time and taking it out of the emergency fund (6 months worth of expenses) it’s a wash. The only thing is I’d save a $2 installment fee each month for paying it by 6 months instead. Maybe that will be my next move.

I’m not looking forward to doing our taxes, because I’m afraid we’re going to owe again. I guess we won’t know until we actually do them. Plus, with me saving the $100 extra, we technically should be getting some back. I’ll keep my fingers crossed.

Do you have extra money put aside for taxes each month?

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8 thoughts on “Putting Money Aside for 2009 Taxes

  1. Kacie says:

    I’m not totally sure on this, but I think if you underpay your taxes too much (maybe it’s $1k?), you owe a penalty fee plus interest. So, it’s important to pay *some* taxes as you go.

    For my blog income, I’ve been setting aside some money to cover my obligation since no money can be deducted. If it looks like I’ll earn $8k or so for the year, I’ll need to pay quarterly taxes.

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  2. Miss M @ M is for Money says:

    There is a penalty if you owe more than 10% of your taxes at tax time, but it’s tiny. I try to set up my withholding to get a balance of zero at tax time. I don’t want to owe, I don’t want to be owed. Though this year I am getting $400 or so from the feds and owe $125 to the state, net $275 in my pocket.

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  3. Fit Wallet says:

    I’ve never made enough money to owe anything in taxes and have always gotten a refund. The mortgage and student loan interest is what really does it–otherwise my refund would be minimal.

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  4. Mrs Money says:

    Kacie- I had NO IDEA about that!! Thank you so much for sharing. I changed it back today. I guess at least hopefully I’ll get some back this year and next. Crazy! You are on top of things- I’m impressed! It would be nice to earn $8k on blog income. 🙂

    Miss M @ M is for Money- I changed my withholding to 0 today and will leave it at that. I agree with you on coming out at 0; that would be nice! I think $275 is a great number to be at!

    Fit Wallet- I am hoping I can get a refund this year. We’ll see soon!

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  5. K-money says:

    I horribly miscalculated my withholding, forgetting to deduct the projected mortgage interest payments from my projected income. This left me with a ridiculous $12,000 fed/state refund, that’s $1000 extra a month I could have had up front. I am readjusting for 2009. California is issuing IOUs instead of refunds so now I’ll have to wait until ??? for MY money, I’d rather owe state.

    Ideally, I’d like to get a $1000 refund. For over 10 years I’ve gotten about $1000 back and had fun throwing it at my debt. It’s a great late winter pick-me-up.

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  6. Katie says:

    I think it is a good idea to put money aside each month it can really help and I do set out with all good intentions with my own money management skills but sometimes it is hard to keep track of the money I make. I think everyone should be keeping a more active eye on their finances

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  7. Mrs Money says:

    K- Money- That is crazy! A $12,000 would be nice, but at the same time not so nice because you could have used that all year. Wow. I think the IOUs for states is insane, but what can you do? I think a $1000 refund is perfect!

    Katie- Thanks for stopping by and for your input! I 100% agree with you!

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