Now that our taxes have been filed and we’re waiting for the tax refund, I decided to review again the packet we got from TurboTax. In addition to our 1040, worksheets, and our NC state forms, we also have the bonus of a report comparing our taxes in 2011 to our taxes done in 2010. Curious to see how we did with taxes? Here are some of the numbers along with my thoughts.
Examining Our Income
When it came to income we had a very small bump last year (a bit over 1%), which makes sense – my husband received a bit of a raise, but I had significantly cut back on work for a couple of months during my last trimester and the first month of her birth.
The good news was that my income didn’t really change that much compared to 2010; working about 9 months and making the same amount as I did in a full year is encouraging. I’m happy because I expect my income to increase this year as I’m working more and I’ve streamlined some of my work.
For my husband, while his wages increased, so did our health insurance premiums with the addition of our daughter into the plan. It’s pretty much a wash. Hopefully this year will be a good year for him and he’ll get another raise.
If you’ve been following along with our monthly net worth updates, you noticed that our savings has grown quite a bit. Most of it was due to maintaining our automatic system with bills, transfers, and small windfalls.
Using Itemized Deductions to Our Benefit
We came out ahead this past year with our deductions. Some deductions, like the interest paid on our mortgage, went down significantly (24% drop!) and I’m happy. Taking the mortgage interest deduction while paying down your mortgage makes sense. Delay paying off your mortgage just for the mortgage interest deduction does not.
Think of it this way-> Are you willing to spend a dollar (to the lender) just to get a quarter back (from the government)? If so, please send me a dollar and I will gladly send you a quarter.
Looking over the report, I also realized we need to keep better records of our charitable donations. We didn’t report everything because I couldn’t find the receipts. With all the tax deductions and credits we used, we managed to lower our taxable income and decreased our tax due by 16%.
Thoughts on Your Taxes
I’d like to hear from you about your taxes. How did this year’s tax return compare to last? What goals do you have for next year?