2007 Tax Year Returns Are Done!
By Pinyo • Feb 25th, 2008 • Category: TaxesI finally completed and filed my 2007 tax returns. Normally, I prepare my own taxes with TaxCut; however, this is the first year that I use the TaxCut Premium Online Federal + State + E-File version. I thought the online version was just as good as the desktop version, and I love the fact that there was no hassle with installation and updates. Oh, and e-filing was a breeze too. However, I still miss the desktop version for some reasons.
Although I am a firm believer in not giving our federal and state governments interest-free loans, I am happy that we are getting nearly $2,000 in refunds this year (whereas, I owed almost $1,800 last year). It would have been tough if we owe taxes this year, since we went from Dual Income No Kids (DINK) to Single Income Couple with Kid (SICK). In any case, I will be adjusting my W4 again to get more money in each paycheck. And in case you are wondering, the refunds (and our economic stimulus tax rebate check for that matter) will go straight into our Roth IRA accounts.
Here are some of the highlights for my 2007 Tax Year:
- New Baby – Having a new baby helped reduced our taxes a lot. This year, we received the Child Tax Credit which reduced our federal income tax by $1,000.
- Blogging Income – Although my blogging income is not as much as it was in 2005, it’s way better than 2006 (when I stopped for a year). This year my blogging income after taking out all the applicable business expenses was 3% of my other incomes. My goal for 2008 is to make my blogging income 10% of my other incomes.
- Charitable Contribution – This is one area where I did extremely poor this year — so poor that I still have the stuff marked for goodwill sitting in the basement. I attribute our lack of charity to the anticipation for additional expenses (due to pregnancy and a new baby), and the lost of my wife’s income. My hope is to do better in 2008 tax year (well, it would be very difficult to do worse).
- State Income Tax Deduction for 529 Plan — Without this we would’ve owed about $300 in NYS income tax. Our contribution to the New York’s 529 College Savings Plan (which is state income tax deductible) actually turned it all around for us. The net result is a refund of over $500.
- Margin Interest – I mentioned this in my stupid tax article. Because I kept minimal cash in my brokerage account, I occasional have to dig into the margin account. Apparently, I did this too much and paid $69 in margin interest in 2007. There’s no good reason why I should be wasting that money, and I hope to eliminate margin interest this year. Of course, this means I’ll need to keep a little more cash in my brokerage account.
Did you finish your 2007 tax returns yet? If not, please be sure to read about my TaxCut Giveaway.
This article was featured in:
- The Tax Carnival #32: Tax Time Management hosted by Don’t Mess With Taxes. For more information, please visit the Carnival of Taxes.
Congrats on getting your tax filing out of the way sooner than later! I have yet to start yet even though I’ve already glanced over my mound of paperwork. Piece of cake…but I don’t think I will be getting a refund this year thanks to strategic withholding changes throughout the year, which is GREAT news, but this just means I am in no hurry to file. I plan to not file until April 15, 2008 on the dot!
Took me less than five minutes. Dunno why it takes some people hours or days or months.
Congrats Pinyo. I may give the online edition a try next year based on your recommendation here.
@MW - if you itemize, it takes a little while to gather all your deductions and double check your numbers. I’ve been itemizing since the year I made $13,574 with a home, a wife, and two kids.
I’m also done with 2007 taxes. It really wasn’t too bad at all, even considering it was my first year to itemize. For next year, it will be interesting to see how much blogging income changes the complexity. It is good to hear that Tax Cut was able to handle the added paperwork. I’m not in a hurry to hand it all over to a CPA, but one day I hope I’ve got enough cash and deductions that it actually makes sense to do that. So I guess you could say I aspire to need a CPA’s assistance.
@MW - if you itemize, it takes a little while to gather all your deductions and double check your numbers. I’ve been itemizing since the year I made $13,574 with a home, a wife, and two kids.
You had a home, a wife, and two kids on an income of $13,574? How much did the house cost and how much was your down payment? (Starter homes where I live cost $150K and up.)
That is certainly important, to set a target goal for your alternative incomes and how much of your overall income do you want your income streams to make up. I am starting to see the value of it with my “passive” income now. I still have not set up a definative goal but you inspired me to do this.
I like the desktop software version of TaxCut better than the online version. I tried the online version, to save $15. Realized two things: I could have freefiled in previous years but not this year when I learned about it; and after I filed taxes, my bank showed an icon saying we have free Turbo Tax from them. Well, I made a note on my calendar for next year. I’ve been paying too much in tax prep expenses!
I like doing my own taxes, and maintaining my own spreadsheet throughout the year to prepare for filing. I am in touch with my Inner Accountant.
@Money Blue Book - Thank you. Yeah, I have to make some adjustment too. I want to get as close to zero as possible.
@Ron - The online version is good, but I may go back to the desktop version next year. I think I have a little more control with the desktop version — could be just perception too.
Also, I am trying TaxACT for my parents. If that works well, I may try it myself next year. We’ll see.
@Adfecto - TaxCut is quite robust and handled my blogging income with no problem.
@Mark - Yeah, I definitely would like to get my alternative income to be 10% next year. My goal is to increase it by 5% each year.
@Kentucyliz - You could also give TaxACT a test run. The fed version is free, and if it works well, the state portion is about $15 more.
I am almost done with taxes using Turbo online. However, I am missing the cost basis of some common stocks which I sold in 2007. I recall the year I bought it (1998) but not the exact date. What is one to do? I called the brokerage where I had purchased the stocks but they only keep records for 6 years.
If I take the average prices in 1998 and use that as the cost basis, do you think the IRS would have a problem with that?
I called IRS and they wanted me to enter zero (of course, they do). I don’t see how this would work in my favor.
JT
@JT - I am not qualified to answer this question, so you should consult with a professional. However, this is what I found on Kiplinger:
“If your broker doesn’t keep records that far back, try to remember when you bought the shares and see what they were selling for then. A stock certificate might be dated or old tax returns might show when you began reporting dividend income. Then look up historical price quotes. If you can narrow down the purchase period to a few months, use the average price during that time as your basis and keep records of your methodology.”
http://www.kiplinger.com/colum...../q1206.htm
Otherwise, you will have to pay the total value.
Nice job on your blogging income, I hope you get up to the 10% target you have set, it’s quite a jump from 3%. Hope the first quarter of this year has started well for you.
@Make Friends — I think I may even exceed that.