Finance Travels

I just heard back from our accountant that our tax refund this year will be about $4800!  I have mixed feelings about this.  On one hand, I certainly don’t like to give the government a $4800 interest free loan, but on the other hand, I certainly won’t mind this one time windfall.  Since so many events happened this year, I really had no idea if I was going to owe money or receive a refund and therefore planned on not making any withholding adjustments until after 2006.  I generally do the taxes myself, but selling and buying a house, several stock gains (both long term and short term), as well as a large distribution from our Roth IRAs all had tax implications that I may have missed.  However, we do need to look at and adjust our withholdings, especially with a new deduction showing up in a few months.

I was most surprised that I didn’t have to pay any taxes at all on the proceeds gained from cashing out chunks of our Roth IRAs.  I knew about the 5 year limit, but I had figured that I would pay taxes on capital gains from stocks that I purchased less than 5 years ago.  However, since the IRAs were started over 5 years ago, all gains were tax exempt.

What to do with this money?

• 2 new toychests for the kids (< $350)
• A new set of cooking pots ($150)
• Fix the hot tub (hopefully < $450)
• Pay the accountant (~ $200)

The rest will go into savings, either our Roth IRAs or to the kid’s college savings.