Doing Our Taxes

I spent a couple of hours working on my taxes last night on Turbo Tax.  I'm not done yet because I'm still waiting on some tax information to come in the mail, but I've got a pretty good idea of my bottom line.  I'm getting about $6500 back between Federal and State.  I have mixed feelings about this.

First, of all, $6,500 is WAAAAY too much to be getting back from the government.  I know, I know...I'm very happy to get any "windfall", but, as my friend Jessica pointed out in her blog Dowell Chronicles, "Why give the government an interest-free loan for the year?"  If we adjust how many dependents we claim on our W-4, we can get some of the money back in our paycheck each pay period.  This way, that money can be working for my family all year long instead of earning interest for the government.  Now, having said that, all of our refund will be going into our money market savings account and will build our emergency fund back up to $10,000.  That's only $5,000 short of our goal for the year.

Thanks to Colin, we have another dependent.  But, a good chunk of our refund is due to the write-offs that came with buying our new home.  Of course, we were able to write off our mortgage interest, as we do every year.  But this year, we could also write off the origination fees (points) for our new house.  I am VERY upset, however, that we missed the move up/repeat home buyer tax credit by 30 days!  GRRRRR!!!!!  We donated a lot of belongings that were just cluttering our old house while it was on the market, so we could deduct the value of those items as well.  We also donated some cash our favorite charities.  The main ones that made the list this year were:  The Mommies Network, The Leukemia & Lymphoma Society, and The March of Dimes.  I still intend to set aside some money to support the charities that are most important to me.  Although the economy makes it hard for many of us, the charities that I care about are getting hit hard.  When money gets tight, charitable contributions tend to be the first thing cut out of the budget.  Therefore, I will continue to support non-profits that have made a huge difference in the lives of me, my family, and my friends.

Reviewing my tax return so far, I can tell that we need to make a change.  Right now, I claim 0 for my small, part-time income, because if I don't, they take almost nothing out of my paycheck.  My husband claims 2, but I think we'll increase it to 3 or 4 to try to even things out for next year.  I'd rather get that money now and put it into our savings and retirement funds all year long.  That way, it will earn interest for me, instead of the government.

What are your thoughts about this tax season?  Are there any changes that you need to make for the next tax year?