So last year when my wife and I filed taxes we weren’t able to itemize like most homeowners do because we had only been in the house for 4 and a half months in 2012.
Having a baby in 2012 also changed our tax situation as well.
All in all I was expecting a return but not a lot. We ended up getting about $1,900 back.
Ok. Not too bad. So what did I do? I adjusted what I claim on my W4 form to make sure I didn’t get so much back. I wanted to get it as close to nothing as possible. Of course, I undershot it slightly just to make sure we weren’t owing anything either. If you want to see the breakdown of what I did for that you can read about it here.
Now unsurprisingly this year we were able to itemize. I knew that going in so I expected to have a little bit of a return this year, maybe a few hundred dollars.
Well we got back about $2,200!
I was not expecting to get MORE back than last year even though we were able to itemize since I adjusted my W4. So I dove into the paperwork (with some help from my wife who went to school for accounting).
I was honestly surprised to see that our actual income numbers weren’t hugely different than they were for last year’s tax return. So pretty much the whole reason why we got such a big refund this year again is primarily do to itemizing.
I had not realized how much of a difference being able to itemize with owning a house would make on our taxes. So now we get to the important part.
What am I doing about it?
Well, the short answer is nothing…for now. Let me explain.
Back at the end of March my job allowed me to start working only 4 days a week instead of 5. That cut my pay by quite a bit. Also my wife is in the process of transitioning to a new position at work which will come with a pay increase, an amount which we won’t know until the transition is complete. That means this year our income has pretty drastically changed.
I don’t feel comfortable (yet) making any more changes to either mine or my wife’s W4 until I know exactly what happens to our income. That may end up being next year that I make the changes. If I’m feeling brave I’ll make some changes during this year when we know some more exact numbers. However, I might want to wait until next year and see what our actual return is and then make any changes.
So what would you do in my situation? I’m honestly asking.
I’m the kind of guy who wants to get as little of a tax return back each year as I can and have as much on my paycheck as possible. Then I’m in control of the money and not the government. I can use it to invest or pay off credit cards (another type of investment) as I see fit.
Let me know what you think! I would love the feedback.