I’m currently in the process of completing our tax returns. Going into this year, I knew my wife and I were going to owe money, as this is my first complete year of work after graduate school. However, we were not prepared to see how much we expect to owe the state and fed. After double checking to see if I entered everything correctly, it was clear that we were owing far more than I had anticipated. We will have to dig into our savings for a house, which we hate to do.
So here’s what we have. Our wages come in at 112K, not including 2.5K in additional earnings from interest in housing savings and mutual fund investments. We were able to subtract 3.2K from my wife’s IRA deduction and 2.5K from student loan interest, but despite the standard deduction and exemptions, the 88.3K of taxable income leads us to eventually owe the feds 3.7K
TurboTax suggests contributing to an IRA through April to increase our deductions. I can certainly encourage my wife to increase her contributions but with my employer’s retirement (pension) plan, I cannot deduct more than 900 dollars should I open an IRA.
Although 112K is a decent income, living in Los Angeles in a one-bedroom apartment certainly doesn’t make us feel wealthy. As I mentioned earlier, we are saving for a house and we are both despondent at having to owe close to 6K. Furthermore, our first born is due to arrive in March, which will definitely put a dent in our finances (but one we welcome).
Is there anything we can do to owe less money aside from increasing IRA contributions? What suggestions can you provide so that we can owe less money in the future without having to dip too much into our house/emergency savings?
Submitted January 30, 2017 at 06:38PM by MondorOfCalifas http://ift.tt/2jP7jJw
