Friday, April 20, 2012

Tax Cut!

Our personal tax return, e-filed on Monday with just a day to spare, delivered an unexpected surprise: For complicated reasons, I overpaid our 1040-ES quarterly withholding. The consequent windfall (especially when I had feared that we might owe even more) lets me ease up a little this year.

Anne’s grownup paycheck provides most of our household income. Her company’s payroll department doesn’t consider our other income, so her federal withholding is lower than it should be. Convincing her to reduce her take-home pay is about as likely as convincing Mitt Romney that the Buffett Rule is a good idea. So for the past few years I’ve used my toy paycheck’s federal withholding to make up a little of the difference. I’ve taxed myself anywhere from 10-15% as our personal fortunes rose and fell, even though the federal withholding tables don’t oblige me to take one thin dime.

This year’s big refund emboldened me to cut my withholding from 12.5% to 10%. That’s right: I’m giving myself a 2.5% tax cut! That’s an average of $12.50 per paycheck, or almost a case of beer per month.

Adjusting my tiny salary by a couple of points is mostly symbolic. My paycheck only plays a bit part in the art of withholding. The amounts that I withhold from Anne’s teaching and freelance checks dwarf my own payroll withholding, and most of this year’s refund came from her freelance business showing a robust loss in 2011 (a feat that will be difficult to repeat this year). With next April a year away and the stakes low anyway, I’m going to take my extra $325 and stimulate the economy.

(This would make a nice segue into a diatribe about misplaced Republican faith in tax cuts, with a bonus dose of Bush bashing. But I don’t feel frisky enough for it today. Consider yourself harangued.)

And what about that serendipitous refund? Alas, there are no exotic vacations or luxury purchases in our future. I’ll stash most of it in hopes of replacing our roof before the fall rains come, and use some to chip away at Anne’s debt.

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