It’s Time To Make The Taxes

It’s that time of year again – tax time. Yay.

I sat down last night and started sorting through all of our tax documents for 2010. I’ve been using an online site to prepare out taxes for several years and will do the same this year.

In early 2010, we purchased our first home. Our lender sent us Form 1098. We now know exactly how much interest we paid in 2010.  Because of this, we’ll be itemizing our deductions this year.

Side note: It’s great to be in a place of our very own, but it’s a bit depressing to see just how much of our monthly payments go towards interest! This form is a great motivation for paying off the mortgage – soon!

I used the online tax software to do some preliminary calculations. After entering our income (from various sources) and our deductions (estimating in a couple of areas) – it looks like we will be getting a small refund from the IRS and owe a small amount in state taxes.

Each year, I try to do my best to estimate the next year’s taxes, and adjust withholding accordingly. I’m not a fan of getting a big refund (there’s no sense in loaning the government money, interest free), but I also want to avoid a big tax bill (and possible penalties). This past year, it looks like I did a pretty decent job with my estimations.

I’ll probably wait until early March to actually file our taxes. We’ll be itemizing our deductions this year and I want to make sure that all of the filing issues have been dealt with before we file.