I realize this is a good problem to have, but I am singularly incapable of figuring out how much tax to pay every year in order to have a $0 balance between state and federal income tax when I file.
Every single year since 2008 we’ve owed taxes and each time I’ve sat down and done the math to figure out how much additional deduction each pay period is required to make that magical $0 number. Every single year I’ve not managed this trick. In fact, the last two years I’ve failed this process so badly that there’s been a scramble to find the cash to pay the IRS. Mostly this is because our gross income has continuously gone up since 2007. Like I said, a good problem, but it is still frustrating.
I’m sure I’m not alone in this frustration. It should be a simple calculation to figure out how much tax we will owe at the end of the year and ensure that the correct amount is being withheld from our (joint) paychecks. Obviously it’s not that simple, or I’m incapable of managing it’s simpleness. Take your pick.
So, once again I’m going to devote time trying to figure out our 2013 tax liability in advance, which will be complicated by the new addition to the household due in late July, and that we expect some changes in our overall gross income for this tax year. Wish me luck as I spend time being an uncompensated tax (un)professional.