Fearless Money

After quite a bit more work than I was expecting, I’m finally done with the taxes from 2005. We are getting $7500 back from withholding!

How can that be?

We’re not cheating or anything. Honest. Actually, what made the biggest impact was the $4700 adoption credit carryover from last year. I find that a lot of people don’t know about that credit, which is really too bad. Let me ’splain.

The Adoption Credit

We completed the foreign adoption of our daughter Clio in December 2004. All together, adoption expenses added up to about $19,000. That easily exceeded the maximum adoption credit of $11,000 federal plus $1500 state available to us. But still, those are some big credits! The way it worked for us is that we simply tracked the expenses and claimed them last year. This was not a deduction, it was a credit. That means we got to take off one dollar from our tax-due for every dollar in the credit.

$11,000 was more than we had withheld from last year’s income, so we could not claim all the money last year. We had a “tax-carryover” of $4,700 to this year. The $1,500 state credit was used up last year, however.

So, this year, we got to claim the carryover tax-credit by filing the proper form with our taxes. This made preparing the taxes more complex, since most online packages couldn’t handle that form, and because all native-Mac tax software stinks. But, with some effort I found that TaxCut Online could meet our needs. The hour or two of effort certainly paid off well. $7,500!

The money will be used to re-roof my sadly leaking workshop, pay for a year of Roller Derby League dues for my wife, and finally to pay off some remaining debt from the adoption trip. Every dollar of income in our household has a purpose, even windfall income. That’s too bad, because I’d really love one of those new MacBooks.

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