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I used TurboTax to do our 2008 taxes, and to prepare the estimated tax vouchers. I went with the option to pay 110% of last year's tax due so there would be no possibility of a penalty.
Our expected income for 2009 has changed dramatically since I did the taxes. I'm pregnant with twins and will not be working the last 3 months of the year, so my income will drop by about $25k. DH's job is not giving bonuses, so that is about $24k less than last year. The babies will be born in time to count as dependents. Last year our AGI was $224k, and our taxable income was $157k, so we're in the zone where a lot of credits don't apply or are phased out and we are skirting the edges of being hit with AMT (I think we paid $653 on AMT exclusion items last year).
There are a few other items that make it difficult to estimate what our AGI will be this year:
* Taxable investment portfolio of $255k (all in mutual funds) -- dividends and capital gains vary greatly from year to year.
* DH sends 12% of salary to an employee stock purchase plan, and takes the option to immediately sell the stock. The gain is reported as income on his W-2
* DH has a small amount of stock options, currently the vested portion is worth about $1k, but it fluctuates with the stock price. If the price is up he may do a cashless exercise, and we have to pay tax on the gain.
* DH does a small amount of stock trading, sometimes resulting in short-term capital gains ($1200 last year).
* I have an AMT credit carry-forward of $9400. At least $5000 of this credit will be refunded or used in 2009, but possibly more if we owe AMT taxes.
I want to reduce our estimated payments, and possibly DH's withholding, so that we don't end up with a huge refund. (Especially in CA, where because of the budget crisis we might get an IOU instead of a check!) What is the best way to figure out how much to pay, and yet make sure that we don't underpay?
Our expected income for 2009 has changed dramatically since I did the taxes. I'm pregnant with twins and will not be working the last 3 months of the year, so my income will drop by about $25k. DH's job is not giving bonuses, so that is about $24k less than last year. The babies will be born in time to count as dependents. Last year our AGI was $224k, and our taxable income was $157k, so we're in the zone where a lot of credits don't apply or are phased out and we are skirting the edges of being hit with AMT (I think we paid $653 on AMT exclusion items last year).
There are a few other items that make it difficult to estimate what our AGI will be this year:
* Taxable investment portfolio of $255k (all in mutual funds) -- dividends and capital gains vary greatly from year to year.
* DH sends 12% of salary to an employee stock purchase plan, and takes the option to immediately sell the stock. The gain is reported as income on his W-2
* DH has a small amount of stock options, currently the vested portion is worth about $1k, but it fluctuates with the stock price. If the price is up he may do a cashless exercise, and we have to pay tax on the gain.
* DH does a small amount of stock trading, sometimes resulting in short-term capital gains ($1200 last year).
* I have an AMT credit carry-forward of $9400. At least $5000 of this credit will be refunded or used in 2009, but possibly more if we owe AMT taxes.
I want to reduce our estimated payments, and possibly DH's withholding, so that we don't end up with a huge refund. (Especially in CA, where because of the budget crisis we might get an IOU instead of a check!) What is the best way to figure out how much to pay, and yet make sure that we don't underpay?
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