Monday, March 24, 2008

2007 Taxes DONE!

Gee whiz, I can't believe what happened looking at our taxes. We finished our taxes last night, I lost some paperwork and we had to scour our files looking for an approprimate date to ask the company for a statement. So we receieved it last week and we were able to finally finish our taxes last night.

Well we did good. Turns out we paid an active tax rate of 5.74% to the federal government. Wowwee. Yep we paid almost nothing to the federal government this year. We ended up with an almost $3400 tax refuned going to DH's tuition savings.

We also paid 4.8% to the state, but got it almost dead on and am getting back $75! That's the closest we've been in a long time.

This got me thinking, we've not really gotten raises since 2005 when we started out. And since then our taxes have dramatically dropped. Last year we paid 8.92% in federal taxes and probably close to the same state because it's a flat 5.3% - standard deduction for everyone. But in 2005 we paid 14.2% to the federal government (which was enough to buy a Honda Accord new). So what happened?

Well we got a large mortgage in 2005, which decreased our taxes by half in 2006. Then DH started school in 2006, but we didn't pay much in tuition. In 2007 we got all mortgage deductions, all tuition deductions, etc. And before you get jealous we had HUGE capital losses, enough to rollover for a few years, plus we had to pay taxes on it in 2006. So we had losses on top of losses (long, complicated story). So we ended up paying even less than we ever. It's reminiscient of 2004, when we first married and paid 1.23% to the federal government.

I know people say pay off the mortgage. But seriously with this drop in taxes? I'd be crazy to not to take advantage of every tax break. It's just that we have a lot of the "correct" expeneses like mortage, tuition, etc. This year it might be slightly higher beause DH got a bonus/raise and DH not playing the company stock game anymore. Like I said we had huge losses in 2007 (5 figure losses).

So maybe I shouldn't vote for the fair or flat tax. It appears we're in the category of people truly benefitting. But for what it's worth, I don't know if we'll be able to repeat this tax thing again. Potentially we'll make more money and owe more, stop paying $30k in tuition, and never again lost 5 figures on a stock.

But I am happy to have filed.

As a side note, we used Turbotax this year and did it ourselves. We had to have help the two previous years because of the stupidity of our company stock grants. And because I'm cheap we also did not pay $18 to e-file instead we'll just wait for our refund to be DD.

3 comments:

"Future Millionaire" said...

I'm jealous - my effective tax rate was 13.66%. But I don't have major capital losses, mortgage or tuition so I guess I shouldn't be too surprised.

Anonymous said...

Good for you!

Barb1954

Fabulously Broke said...

I too, am done my taxes, but am waiting for stupid ex business to clear through so I can claim it...

*sighs*

Good job with getting all that cash!!!