Last week I wrote about my awesome raises that I was fortunate enough to receive this year, and how I hadn’t adjusted my withholding accordingly.
This weekend, I played around with the IRS Withholding calculator, and plugged in the numbers that I had now. According to the calculator, I would owe Uncle Sam $1,721 at the end of this year. Ouch. That’s even worse than last year’s taxes owed.
I played around with the calculator for a bit, and I decided that raising my contribution to my SIMPLE IRA would not lower my income enough to really make a huge dent in the amount that I would owe. I followed the directions that the calculator page gave to me – decreased allowances to “0″ and withheld $130 in addition – and hopefully I won’t owe or be refunded more than $25.
This won’t set us back financially, although we were going to put the extra money towards the credit cards. Maybe next raise.
Are there any other alternatives to lowering that tax bill?