7 Ways to end up owing taxes even though you’re poor (unhappy list)
The Hubbie and I (commonly known as Team Wilson) are not wealthy by any means. We work in fairly low-paying jobs (in the $10/hour range) despite our advanced college degrees. And yet, despite living paycheck to paycheck, we have managed to end up owing the government an additional $2,000 this year.
Here are 7 reasons why (my UNHappy List of the month).
1. Miniscule pay raise. I actually worked full time for the whole year and we earned a little more money since I wasn’t going to school. But that leads to #2.
2. No longer a student. Those tuition credits came in handy.
3. Debt Settlement = Taxable Income. So poor that I defaulted on a student loan and settled the debt for about 50% of what I owed. Turns out that counts as “taxable income.” Because that makes sense.
4. Making Work Pay Credit (thank you President Obama). The government chose to withhold less money out of every paycheck as a brilliant way to stimulate the economy. It turns out we would have been better off without the extra $10 in each paycheck. Thanks Obama. I thought you were supposed to be helping poor people!
5. Not a homeowner. We haven’t been able to afford to buy a home (we wanted to be one of those responsible people who waited until it was a smart choice to avoid the risk of ever facing foreclosure). The reward? Nothing.
7. Didn’t contribute to a retirement plan. Why do all the credits come from doing things that just benefit you?
So what are we going to do this year? Buy a house and have a kid. We should fair much better next year in the tax realm.