Today is President’s Day in the United States, and a Federal holiday. It also happens to be the day my family sets aside each year to get our taxes done.
In 2017, the President signed into law the Tax Cuts and Jobs Act. The law’s purpose was to lower the amount of taxes paid by most Americans (hopefully stimulating the economy, creating jobs, etc.). There is plenty of debate elsewhere on whether this legislation is a good or bad thing, I only mention it here because I knew it could have some effect as we worked to pay off our student loans in 2018.
I was eager to get my taxes done today, because I honestly wasn’t sure how it was going to play out. As I read stories like “More Taxpayers Will Owe The IRS In April Because Of Underwithholding, Report Says,” I started to get a little nervous.
Would our work to pay off our student loans feel like a pyrrhic victory? Fortunately, the answer ended up being, “No.”
Our taxes are filed, and not only did we end up paying less taxes throughout 2018, but we are also receiving a refund. This refund will go toward our next goal of going to Disney World in September. I am quite happy with all the hard work from 2018 turned out. It was all worth it.
The filing of our taxes is the final bookend from The Year of No. Although the year ended with some personal setbacks stemming from the unexpected death of my mother, I am happy to report that the efforts of 2018 weren’t further penalized by having to pay additional taxes.
We are still not 100 percent completely debt free because of events toward the end of last year, but we are done with the debt I hated most: student loans. For that, I am very grateful.
An interesting tidbit I gleaned from my discussion with my tax preparer this morning, in addition to other education I learned last year, is that the Tax Cuts and Jobs Acts might actually reward taxpayers more than they realize.
You can potentially lower your tax bill by putting your money in pre-tax savings, such as a 401k, an HSA (if available to you), and college savings plans (if you have dependents who will go to college). This could lower your tax bill by moving you toward (or even into) a lower tax bracket, which would also lower the amount of taxes you end up paying.
Is the new tax law best for the country? That is another debate entirely. But, paying less taxes can be much better for your pocketbook, especially if you’re trying to get out of debt.
I wanted to stress how important I think it is to hire an expert. Our taxes are probably not complex enough to necessitate having to use a professional tax service. However, there are enough changes in our tax law from year to year — let alone when major legislation is passed — that I find great value in having someone who knows much more than me guide me through the finer points. My go-to is Hume’s Tax Service from when we used to live in Lawrence, Kansas, and I don’t plan on stopping using their services just because we moved 50 minutes away.
While I was there, I also took the time to ask how recent tax changes would affect our future plans, such as buying a house, and received some important information that will help us as we move toward that goal.
But first, we’re going to Disney World.
This chapter of my life was called “Getting out from the burden of student loans.” It is finally complete.