Category Archives: Stress

Federal and State Estimated Quarterly Tax Payments are Due!

On Wednesday, I did a quick estimate of my taxes to see how much more I would owe for federal and state taxes and I realize that I may owe so much that I would be charged a penalty for underpayment! I guess I didn’t realize how much I made blogging, so even though I withheld an extra few hundred dollars on each paycheck since August, it didn’t nearly cover the taxes I would have to pay for blogging.

For federal taxes, there’s no penalty if you owe less than $1,000 in taxes. I was over that by a decent margin. OK, so how much would I actually owe, what’s the interest rate? 4%. Crap, that’s about triple what I earn in interest, what was I thinking, why didn’t I plan earlier??

In a panic (because I hate paying for things I could have controlled!), I looked up the federal tax rule for who has to pay estimated taxes:

You must pay estimated tax for 2010 if both of the following apply.

  1. You expect to owe at least $1,000 in tax for 2010 after subtracting your withholding and credits.
  2. You expect your withholding and credits to be less than the smaller of;
  • 90% of the tax to be shown on your 2010 tax return, or
  • 100% of the tax shown on your 2009 tax return. Your 2009 tax return must cover all 12 months.

Alright, I already said I fit criteria 1. Mark that as a yes. On to criteria 2.

While I had a lot withheld, it’s not 90% of my liability. Shoot, yes again. Down to my final chance.

Since this is my first year making a significant amount of money blogging, I owe much more in taxes this year than last year. That means I don’t fit that last option and I don’t have to pay estimated federal taxes! Crisis averted, right?

Not quite, I still have to worry about state taxes. In DC, the rule is that if you’re going to owe over $100 in taxes, you have to make quarterly estimated tax payments unless those payments would are:

  1. 90 percent of the tax due for the taxable year; or
  2. 100 percent of last year’s tax obligation (if the taxpayer was a 12-month DC resident during last year).

OK, looks pretty similar, right?

I don’t fit the first one, but I fit the second one, right?

Well…not exactly. I didn’t move to DC until July of 2009, so technically I wasn’t ‘a 12-month DC resident during last year.

O gosh, according to the annualized 10% underpayment rate, I was going to owe about $75 if I paid the bill immediately, which isn’t the end of the world, but definitely should have been avoided.

I want to pay these estimated taxes as soon as possible, even if they’re late, because the sooner I pay them, the sooner I won’t have to pay interest on it.

After looking up the rules about how to pay, I realized that the payment wasn’t due until January 15th, 2011. Which means I still had 3 days to make the deadline! I found the proper form online, filled it out, and I’m mailing it off today and will hopefully avoid any penalty.

Obviously, I’m going to start making some major changes. I signed up for the online payment system for the federal estimated quarterly tax payments as well as the online DC payment system. In 2011, I’m going to be very careful, and this way I’ll save myself some stress come January 2012.

Do You Feel Bad When The Price Drops After You Purchase?

Is there anything worse than making a purchase and seeing the price drop immediately after?

In this sense, I’m usually the bearer of bad news. Don’t try bragging to me that you got a good price on your new technology. Did you hear about the best deal I ever got? Simply put, you won’t match me. But if you need help getting a discount, just let me know, I’m more than happy to help.

When my friend questioned my decision to dish out $200 to upgrade my iPhone, I told her I made a bunch of money selling the iPhone on Craigslist. Her response? “Of course you did.”

There are times that I want to shove it in your face. Don’t get overly excited because big trees fall hard.

But here’s my real question: if you’re happy with the price you got, why do you care what anyone else paid? If you’re happy with your deal, be happy with it. Don’t let me bring you down.

There are some great posts about this topic. I won’t try and match them. But what it boils down to is that there are two types of people, maximizers and satisficers. Maximizers are the type of people who must always get the best deal. Satisficers are happy with getting a pretty good deal. Guess who’s happier? Satisficers.

For maximizers knowing that they could have gotten it cheaper ruins it for them, even if they did pretty damn well.

In some ways, I’m a hardcore maximizer, even if I talk about the big picture. I love getting a great deal. On my last shopping trip, I got 18 bottles of pasta sauce and 18 boxes of pasta for $27. Usually the sauces are $2.50 apiece and the pasta is $1 each, so we saved $36, or a cool 57%. I can’t get enough of that! I’ve been tracking the price of an external hard drive for about 3 years now, and maybe this Black Friday will be the point I pull the trigger.

I try my best to be a satisficer, even if it doesn’t come naturally. I talk about big wins and I don’t clip coupons. I set larger than necessary budgets so I won’t be pressured into saving so much that it cramps my lifestyle. If I’m on the fence about a purchase, I go for it so the stress doesn’t eat me up, and I don’t micromanage my finances. I sweep excess savings into my bank account just once a month.

Hopefully I’ll teach you to be a satisficer.

Learning My Lesson: Automate Your Finances!

I declined the option to automatically pay my credit card each month. I could have set it to pay the full amount by the due date and avoid any worrying. I could have avoided any reminders and let my bank accounts work in perfect harmony. But I didn’t.

Instead, I get a notice on the 1st of the month telling me that my bill is due on the 4th. Then, I use ING to pay the bill online. Sounds easy enough, right? WRONG. It takes a few business days for the payment to show up in my credit card account, so when the 1st is a Wednesday or Thursday, the 4th is a non-business day and the money doesn’t show up until Monday! That’s exactly what happened this month. So what did I do?

I went to an ATM, withdrew many hundreds or dollars from my ING checking account, deposited them into my Bank of America checking account, then paid the bill online (which was immediate because it was within BOA). What a hassle! Plus, even though the two ATMs were located within 30 feet of each other, I didn’t enjoy having so much cash in my wallet.

The truth is that I check Mint often enough that I would notice if there was a mistake with my credit card. If I got charged for something I didn’t purchase, I would figure it out pretty quickly.

So, in the name of reducing stress and being able to focus on other things, I’m finally “truly automating” my expenses. I can tick off one more thing on my list that I don’t have to think about each month. Score!