I just finished preparing my federal income tax return late last night and got it off in the mail today with my payment…GRRR. My husband was really hoping for a refund again this year, since we had an added deduction and major medical expenses for that delivery. But no, we had to pay!
You see, despite having a lower sales volume (in dollars) in our business, we drastically improved our gross profit margin, maintained similar expenses (in total dollars) and somehow ended up with a much higher self-employment tax. Our exemptions and itemized deductions wiped out our adjusted gross income, but our tax credits weren’t enough to offset our self-employment tax. Okay, so we didn’t end up owing any income tax, but the bottom line is we had to write out a check!
But you know, that’s not the worst of it…the worst part is the stress and unsettling feeling of…what if I get audited? It was such a nightmare pulling all those receipts and paperwork together, generating spreadsheets, compiling reports, hoping I was doing everything right. I didn’t claim anything I didn’t have a receipt for and this year I made sure we had written documentation on the business use of our vehicle so I could claim that expense. Unfortunately I didn’t have receipts for the donations I made to the thrift store all year, but that didn’t matter since it wouldn’t have lowered our bottom line anyway.
I used Turbo Tax (for the third year in a row), with the idea I could take advantage of all the little known deductions available…after all, when you take your paperwork to a tax accountant to prepare your return, they just enter it all into Turbo Tax and charge you bigger bucks. Oh yeah, they sign their name too. I’m glad I had the software to walk me through it. But truth be told, I wish I didn’t have to go through all the trouble of the whole mess.
All in all, I did my duty. I rendered to
Caesar Uncle Sam what was due to him…but I’m not going to lie. I didn’t like it one bit.
How can we prevent this stress going forward? Spread the word about the FairTax proposal!