D and I did our taxes yesterday (why wait?), and the good news is, we got a significant refund from the state of California. The bad news is, we had to pay more than expected to the federal government because of the Alternative Minimum Tax. Boo AMT. Boo!
It’s more annoying than anything else, because we knew we were going to make a lot less money in 2007 than 2006, and have been paying estimated taxes every quarter. We had calculated a 90% target, but AMT added a few thousand dollars to our total taxes. Ironically, we suspect that the trigger in this case was the large deduction we took because of our state taxes paid for 2006.
Other IRS-related lessons we learned recently:
- Know how to fill out your Schedule D correctly.
- H&R Block’s TaxCut software is more user-friendly than TaxAct.
- If we ever get rich, we are definitely hiring an accountant.
Fortunately, we’re going to make a lot less money this year, so we should avoid a lot of these tax traps next time around. And by then, we may be living in a place with no state income tax. That would be nice. Get off my lawn, Caesar! And take those damn kids with you!