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One Cobble at a Time

One of the Realities of Uneven Year-to-Year Income

Sandra Tayler's Journal

responsible woman

A cobble by itself is just a small stone, but when many of them lay together they create a path . My life is made up of many discrete parts. I have to find ways to fit them all into place so that I can continue to journey where I desire to go. This journal records some of the cobbles that create my path.

One of the Realities of Uneven Year-to-Year Income

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responsible woman

We had a financial boom year last year, which means we had a big tax bill this year. It also means that our estimated tax payments for this year are recommended at a rate that would cover us having a boom this year too. In theory this is setting us up for a tax return next year, but I don’t count that money until I see the paperwork that says I get it back. I’m certain that there were financial moves that I should have taken last year to smooth all of this out. Last year I was also dealing with major family transitions and mental health issues for multiple family members. I did not pay attention as I should have. Howard and I have had many conversations about this and we’ve taken steps to readjust the ways that we manage our emotions and anxiety surrounding money. I still feel bad about about it. It was my job and I feel like I didn’t do it right, but I’m doing better now and will continue to do so going forward.

All of this means we’re being careful about spending this year. We’ve built in more accountability, more reports, and less avoidance. I probably won’t feel confident about my financial skills until after next tax season. The new structures have us headed in the right directions, but far more slowly than I would like, because so much money is getting sucked into that quarterly estimated tax payment. It also means that this year, when federal financial aid for Kiki’s college tuition would be very helpful, we’re unlikely to get it. Because they’re looking at the tax records for last year, the boom year. I filled out the FAFSA anyway. Now I’m off to do things which will earn money.

Comments are open on the original post at onecobble.com.

  • I'm in a very similar situation this year. It keeps things ... interesting, doesn't it?
    • Yeah. "Interesting" as in that old curse "may you live in interesting times."

      I keep beating myself up for not planning better last year. Yet when I look back, I can't say that we were really foolish. The boom year let us cover our first year of college tuition, unexpected medical bills, and a complete HVAC system replacement when our AC and furnace died. Even if I had a do-over, I can't guarantee that I'd make different choices. But we're watching all the pennies this year.
  • Ugh. Sympathies. And sometimes it doesn't matter how well you plan; life happens, and you've got to take care of things.

    There are times I think the house and car know *exactly* when my royalty checks come in, because so often those checks are followed by something breaking and costing almost exactly the amount of the royalties :-/
  • My sympathies. It is a good problem to have, in a sense, but it sure is a pain.

    2013 was the best year I've had since starting freelancing a decade ago (yegads it's been that long?). This year will be lousy by comparison. So my estimated tax figures based upon 2013 look a bit like yours.

    I'm ignoring them because for starters, the 1st quarter's payment is more than I actually made in that quarter. Secondly, they're made using income assumptions that are outright wrong in both of our cases.

    The precalculated payments are not mandated payments. You can change them if your income situation changes.

    There are some trickier bits with working out estimating on the pay-as-you-go basis like I do. That's what I pay my tax accountant for :)

    Hang in there.
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