I owed an additional $1,249 in taxes for 2023. I did not have the benefit of 401k contributions so all of my W2 income was taxed. I also had almost $2,500 in interest income. I ended up paying approximately $30,300 total in taxes in 2023.
That's definitely a lot of money. I am on the hook for quarterly taxes for 2024. I don't think I will owe much, if anything, in 2024 as I will have the benefit of my 401k contributions to offset my taxable income.
This was a good lesson to plan for taxes. I don't know anything about tax shelters or ways to decrease taxable income, other than retirement contributions. I would like to research this topic so I can have a better understanding of planning for possible future tax bills.
Anyone have a surprising tax bill this year? Anyone ever have to look into (legal) ways to decrease taxable income?
Since 2023 was our first full year in LA, we got hit with a small tax liability that we didn't see coming. Nothing to do but pay what was owed and adjust the withholding.
ReplyDeleteIn hindsight, I'd dump as much as I could into an HSA too. That money isn't taxed the year it's put in(and then even when you use it for qualifying medical needs down the road). You may not need it now for medical expenses, but when you get old you will use it and you'll be glad you have it sheltered then.