I just finished filing my taxes. I must say, even with the addition of a little ‘business income’, the whole process was pretty mundane.
I had under-withheld by about $400, which isn’t bad, considering that I didn’t really ‘know’ what my annual income was going to be. I didn’t have to pay any penalties. The tax forms were submitted electronically to both the IRS and the Georgia Department of Revenue.
The IRS allows payments via a direct draft from a checking or savings account – but the State of Georgia requires a check. So, even though I ‘e-filed’ both returns, I still had to mail a check to the Georgia Department of Revenue.
A few weeks ago, in an effort to reduce taxes and increase retirement savings, I opened a SEP-IRA. And, today, I authorized a withdrawal from ‘business checking’ to my Vanguard SEP-IRA account.
Interesting fact about the Vanguard SEP-IRA –
While Vanguard has ‘minimum-contribution’ limits for most of their funds, these limits are ‘waived’ for those who open SEP-IRAs. Why? Well, not all businesses will make enough money to meet the ‘minimum-contribution’ limits. Also, while they typically charge a $20 a year ‘maintenance fee’ – this fee will be ‘waived’ if you select ‘e-delivery’ of all financial information.
I’m going to put my contributions in The Vanguard 500 Index Fund (VFINX)
We owed about $500, had the money set aside ready to roll. We funded our first Roth IRA before we filed our taxes. We’re now saving up to open the second one.
We invested in the Target Retirement 2050 fund for diversification purposes. Once we get over the investment humps — for us non-SEP folks — then I’ll consider moving into individual funds.