The Great Tax Season of 2009

It is the start of my current favorite time of year…tax season. I’m surprisingly not being sarcastic here. To me, tax season is like the financial showdown of the year. You get to review how you’ve done for the year, and usually you get your tax money back that you’ve paid through the past year, and hopefully apply it to something that benefits you.

At least that’s how it is for us lower class americans. Upper class probably has less fun with this time of year.

This tax season will be slightly different for me, because I will probably be itemizing some items due to buying a house. Any interest I paid towards my mortgage can be written off in my taxes and considering the beginning of all mortgage payments are mostly interest anyway, this is a good thing. Apparently settlement fees can be written off as well.

I’ve never itemized before, so I’m not entirely sure what to expect. I’m hoping my Aunt can help walk me through the process since she’s the one that always does my taxes because she works at Jackson Hewitt.

I’ll also be writing off my Grove donations this year for the first time. Each year I make a monthly pledge to the Grove, and for 2008 I pledged to donate $30/month. I exceeded my goal, not by much, but I’m just happy to have met it given how this past year has gone. I haven’t quite figured out how it works, but I know I can also write off gas expenses driving to and from the Grove since I am an officer of the Grove. But how do you calculate something like that? I don’t put just enough gas in my car to drive to the Grove and back, I always fill my tank up. Do I have to do some crazy financial equation here that figures out how much I use every time I drive down and calculate that with how many times I actually did go down? I’ll have to talk with Will about that.

So a couple thousand in interest payments for the house, a small amount written off for the Grove, the $7500 first time home-buyers tax credit, and then my usual qualifications of head of the household and 1 dependent…. I’m predicting between $8-$10k back. Hopefully closer to the latter, but I don’t like getting my hopes up.

This money is allotted for:

• $5900 towards paying off the mustang, most likely less because I’ll be asking for a pay-off quote
• $300 towards paying off 3 more people who donated money towards our down payment
• $1500 towards my dads loan (or whatever is remaining up to $1300)
• And the remaining balance towards the final people who donated money towards our down payment.

With the car paid off, I will be adding $320/month towards my dads loan, for a total of $500/month payment (plus any extra money I get throughout the year) we’ll be using to snowball my dads loan. I suspect it to be completely gone in September, where I will change our snowball payment of $500/month to dads medical bills which (I believe) is only $1300, so that will be taken care of in December.

Once all those are clear, I alone will be putting my $320/month into the remaining down payment loan. I believe they have an ING account, so this will be an easy transfer. I don’t want dad to have to pay anymore debts, so he’ll be completely debt free at this time. Any tax money or excess money I get will go towards the down payment loan until it is gone, which I expect it to be fully paid off in 2010.

After that, all that is left is the mortgage in 2010. At that time I’ll be saving up at least 6 months worth of expenses into savings and enough money to buy my next car in cash. And slowly adding more and more to my mortgage payment so it’s paid off faster.

Some items I’m going to have to start preparing for taxes:

• Roth IRA Statement for the Year to show interest gained
• 401k Statement for the Year to show interest gained
• All of my ING Account statements for the year to show interest gained, though they deliver their own 1099 tax forms at the end of January (Total Interest: $186.87)
• W-2’s that I’ll get in February
• Bank account information (routing # + account #) for the direct deposit
• Settlement fee information for buying the house
• January mortgage statement to show interest paid in 2008 for writing off, as well as whatever form it is that the lenders send out that show this as well.
• Bring my own statement from Microsoft Money for all accounts, just in case there are any questions or additional things I can write-off that I don’t know about