$11,706 to be exact. And no, this is not an April Fool’s joke ;)
(I was going to pretend I sold this blog for a million dollars and was dipping out, but came to my senses figuring you guys were way too smart for that… It’s pretty obvious my blog is worth at least a billion.)
So today, I feel rich my friends! Despite my monthly emails back and forth w/ my accountant trying to assess the damage of Financial Apocalypse over the summer, we still managed to overpay and are now being handsomely rewarded for it. Which only reinforces my love for “loaning the gov’t money” vs calculating everything appropriately even more. If my accountant can’t even predict it perfectly, how the heck can I expect myself to? (And believe me, when there’s a *surprise* in the tax department you want it to be on YOUR side, not the opposite.)
So yet again I happily hand over my $400 for my accountant’s services which I’m sure played a nice role in figuring this stuff out… along w/ the following variables I reckon changed the game:
- We lost tons of money on our rental house ($20k fixing it up, mgmt fees, etc)
- We paid tons of money to childcare (I had no idea you save money w/ taxes here??)
- We/I earned significantly less than expected in 2013
- Other things I forgot to mention to my accountant?
Whatever the case, we now have over $11,000 more to play with than planned. A good problem to have :) Some of it will be automatically applied to these 1st quarterly payments coming up this month, but the rest is to do with as we please. Which will be to max out both my SEP IRA, as well as my ROTH.
The former because if we don’t I’ll end up getting a few thousand dollars LESS back (the power of retirement accounts!), and the latter because I don’t want to break my record of 6 years or so in a row maxing out the Roth :) That’s over $30,000 put in which has grown to a TON more over time already! Currently hovering around the $50,000 mark WITHOUT this new $5,500 infusion. Talk about the power of compound earning.
But even more shocking than all this extra new money we’re now getting is what our 2014 payments are estimated to look like. A DRASTIC difference from previous years. If you’ll recall, this is what we were paying throughout the years:
- 2014: $2,800/quarter
Wow. That’s more than HALF less! Holy cannolis, Batman! And since I’ve hoarded a lot of cash in my “taxes” business savings account anyways, it pretty much means I’ve already got this entire next year covered. So in a way, I can feel like I don’t have to pay taxes at all this year – woo!
Of course, on the flip side, this means that yes – we’re making a $hit ton less than normal. Over a half less, for that matter – similar to these future taxes we’ll pay. Part of that is our doing on purpose (nixing the wife’s income to focus on her final PHD dissertation, selling off $50k of my online projects), but another factor is that my online businesses are making a lot less than normal too. Which is why we named it our Financial Apocalypse!
Still, I can’t help feeling on top of the world today. Or, all year for that matter. It’s funny. You’d think losing half your income would mean you lose a ton of happiness in the process, but that simply isn’t the case. Yeah I have my days where I want to punch everything in the face – especially my income streams – but overall I’ve only sensed a small amount of discomfort. I could be in denial, but for now I’m running with it :)
So a happy April Fool’s day indeed for us. Only the trick was in our favor for once. And for the first time in at least 8 years, we get to experience this long forgotten joy of passing Go and collecting $200. Multiplied by a whopping 55, haha… I’ll take it!
And while we’re on this joyous topic of taxes, how did you guys fair this year? Did you get a nice surprise too, or did you have to pony up something? Do you do your own taxes, or pay someone else to? On a scale from 1-10, how sexy is J. Money? (Have to make sure you’re paying attention ;))
I think I’m gonna go now and play with all my new handfuls electronic money… If only the gov’t sent briefcases of cash!
PS: A lot of you have asked why I participate in an SEP IRA vs Solo 401(k). I didn’t quite know myself so I asked my accountant why we do that and she told me for two reasons: I always wait until the following year to invest which is not possible in a Solo 401(k) (you have to invest the money in that *same* year – you don’t have until April 15th like with others). You have to spend a lot of time and money to get it set up correctly, and you need a specialist to do it – aka not my accountant or me. And it doesn’t guarantee I’d make more in the long run anyways. So I think for now we’re set up appropriately :)
UPDATE: Apparently I need to research this Solo 401(k) stuff more :) Thanks to everyone who piped in down below in the comments!
[Bad ass briefcase full of cash photo by Ryan Shea]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!