It’s March 15. Do you know where your tax return is?
If you’ve already completed and sent in your return, good for you! Whether you are writing a check to the Internal Revenue Service or celebrating a refund, you can breathe a sigh of relief knowing that this annual chore is out of the way. And if you haven’t done your taxes, it’s not panic time, yet. 🙂 You still have a whole month until the filing deadline!
Filed or not, tax time is a great time to take a closer look at your finances. Here is one reason: there are some exceptions, but if you and your husband file a joint return, you are both “jointly and severally liable for the tax” —even if you yourself do not earn an income. In general, there are quite a few reasons to seek a good understanding of your financial situation, and your tax return is a fine place to start. Now, depending on the complexity of your tax situation, you may need to be an accountant yourself to understand the entire return. But you can probably glean some basic information from it relatively easily. So if your husband or accountant completes your tax return and you don’t usually look at it (except to sign it), commit to doing so this year. (I do not judge 😀 : This year an accountant did our taxes, and the completed return has been sitting in an envelope on the table for a week. I only just looked at it yesterday. )
One of the things you will find on your return is your total income. It is in Box 22 of the 1040 Form. As I discussed back in September, this is one of the key figures that makes up one’s overall financial picture. (You could probably sum up your finances as: what you own, what you owe, what comes in, and what goes out.) Personally, I don’t think it’s unreasonable that someone might not know these numbers, including total income, off the top of her head. A family’s income might vary from month to month if either spouse is self-employed or does seasonal work. My family’s income is pretty consistent, but I have not looked at an actual pay stub in months. I know how much of my and my husband’s pay is deposited in our checking account every two weeks. But that doesn’t include what is withheld for taxes or deposited into retirement savings and HSA. I was not sure of our total income for 2014 until I looked at our return this weekend.
But the number that most interested me is found on the second page of the return. If you are receiving a refund, Yaaay! (This goes in the “what comes in” category for you. 🙂 ) If you haven’t already spent all of it in your mind, I am even more impressed. But as wonderful as that April windfall can be, if you have a big number in Box 75, you may want to consider decreasing your withholding and foregoing the refund.
Wait … what?
Why wouldn’t you want a refund? Who doesn’t like getting checks from the IRS?? Well, if you struggle with expenses throughout the year, it might be better to hold on to more of your paycheck each month. That is, if you are disciplined enough to either a) use the extra money for necessities rather than increase your discretionary spending, or b) put the extra money into savings. But for many of us, having more money each month just means we spend more money each month. In that case, if withholding were decreased, the extra money might not even be noticed or appreciated. AND there’d be no chunk of cash in the spring stocking.
On the other hand, if you have a significant tax bill, consider increasing the tax withheld from future paychecks so that the bill will be smaller next year. The IRS website has a withholding calculator to help you determine what to enter on your W-4 form. There’s also a brief video you might find helpful. By all means, you and your husband should consult the website, other IRS resources, or a professional in making decisions about your taxes. In fact, nothing I have said here should be construed as tax advice. I am not a financial advisor and I have no training or expertise in the field. But what I do suggest is that you could become an expert in your own finances, and may have excellent advice and input as to how they should be managed. You can be a valuable partner to your husband in the stewardship of your family’s financial blessings. And there’s no time like the present.
Thanks for stopping by!