As we said goodbye to 2011 and welcomed 2012, there is always one thing that crosses my mind: filing my taxes and getting a nice, big, juicy tax refund. I doubt many other people think about though. Maybe they should think it all the way through.
When you’re in the American middle class, as I am, you think about how much you have to pay or how much you’re going to get back. It’s rare that we break even. I’ve been lucky for the last 30 years or so, I’ve never had to pay more than was deducted from my pay cheque. This is one of the advantages of owning your own home.
When I first moved into my Westbury apartment, in 1980 something, I rented a two- bedroom garden apartment for about $550 including two parking spots, heat and water. I paid for the cable, phone and electric. It was still a good deal considering the size of the apartment, and it’s great location.
Fast forward a few years, the property sells and is going to become a co-op. Did I want to continue to rent and throw money away or try to buy and look upon it as an investment and tax deduction? It was a big decision, with long-run consequences.
I decided to buy the apartment and somehow managed to get a 30-year adjustable rate mortgage (ARM) for the sale price of $68,000. Getting the mortgage was easy and I had a party to celebrate that I did it. Paying it over the years always managed to be a challenge, especially when the rate adjusted upwards.
Having an ARM is like playing Russian roulette, once a year. You never know what’s going to happen. Sometimes your mortgage goes up, sometimes goes down.
Oh, did I mention the monthly maintenance that I also had to pay the coop? That was for the heat and water, general upkeep of the grounds, salaries for coop employees and the payment on the underlying mortgage. When you combine these two monthly payments and it was a sizable chunk of change.
Thank goodness that the mortgage interest and 80% or so of the maintenance was tax deductible. I always looked forward to getting my taxes done as quickly as possible. I wanted to get that money back.
Some people look at that money as an interest free loan to the government. I look at it as forced savings that my Uncle Sam is holding for me, waiting for me to write to him and get it back. It’s nice when relatives pay what they owe you.
When I sold my apartment and bought my house, I knew that I would get more money back, since the house mortgage was so much larger. I also thought I could deduct the loss I took on the apartment, about $4K, as a deduction. The accountant said that wouldn’t count. I was just happy to be able to sell the apartment at a decent price and buy the house for a good price.
Then, of course, you have to think about all the extra deductions you can take, starting with kids. Michelle was born just a little too late to deduct for 1995; that stunk. Melissa came along just in time for the 2000 taxes, so that was a blessed event.
The deductions keep adding up. Two kids, mortgage interest, school taxes, real estate taxes and various home improvements. Uncle Sam is holding a small windfall for me.
I also have a wish list in my head of what I would like to do with that tax refund money. Some usually goes to pay for camp for my daughters, summer vacation and various projects around the house. I hope there’s a few dollars left over for me to splurge.
This year camp will cost less, as Michelle is going to be a junior counselor and we don’t have to pay. Melissa will go to camp, full time, but only for 7 weeks instead of 8, as we’ll take her on vacation with us. If I could leave them home alone, with Daphne the cat, I would, but I’m sure chaos would ensue and Daphne wouldn’t be able to control the two of them.
The other thing that I need to do this year is have our front walk redone, again. Because of poor workmanship three years ago and all the snow and ice from last winter, the walk is in very poor shape. This time I want it ripped up and completely redone. A neighbor down the street had to redo their walkway after Hurricane Irene, and it came out very nice with a combination of concrete and bricks.
The last couple of years, due to changes in the tax codes, we’ve been taking more money home on a weekly basis, so that refund check keeps getting smaller. Last year was about half of what it was the year before. That’s not to say I want to pay more taxes, I just want to get more back.
I am patiently waiting for all the W2 forms and other assorted tax statements to arrive, so I can mail them off to Kenny the Accountant. He’s a nice fellow, but as his firm gets bigger, his rates go up. I started at $75 a few years ago, now he’s up to $125. I can only hope that it doesn’t go up this year.
Be a good citizen, pay your taxes, don’t cheat the government and hope and pray for a nice refund.
Matt Seinberg lives on Long Island, a few minutes east of New York City. He looks at everything around him and notices much. Somewhat less cynical than dyed in the wool New Yorkers, Seinberg believes those who don't see what he does like reading about what he sees and what it means to him. Seinberg columns revel in the silly little things of life and laughter as well as much well-directed anger at inept, foolish public officials. Mostly, Seinberg writes for those who laugh easily at their own foibles as well as those of others.
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