By Sarah Janda
I recently heard about Free Shipping Day that was on December 18th this year. There were hundreds of stores that participated and offered free shipping. I decided to check it out this year and went onto Targets website as they were taking part in free shipping day. I spent over an hour adding various products into my cart that I was going to have shipped directly to my family and friends in Wisconsin for Christmas gifts. When I went to checkout and pay for my purchase it was telling me that the shipping fee was $15. I wasn’t sure why, because I thought it was free shipping day, and there were various places on the website that said spend over $50 and receive free shipping. So, I thought because of those two options, I was covered. Well, I failed to pay attention to the fine print. Only certain items on the Target website were available for free shipping, none of which were in my cart. Also, spend over $50 to get free shipping was only available to those with the Target store Red card, which I don’t have. Also, because I was shipping to a state that has sales tax, there were taxes included, in addition to the shipping fee. So, I decided to forgo Free Shipping day this year and will have to hurry and get to the store to buy some gifts.
Turns out my poor tax planning hurt me more than I had expected. On Friday we went to pick up our returns in the best of moods because we assumed we would be getting a couple of thousand returned to us. We were already starting to plan the vacation we would take with the money we got back. Well….turns out we owe a couple of thousand. Both of us were dumbfounded when the tax preparer told us.
How could this be?
- Getting married hurt us- In 2009 I was able to file head of household and deduct more.
- Not owning a home- In 2010 we rented our home so we did not have home mortgage interest that we could deduct which both of us had in previous years.
- 401k rollover- I rolled over a 401k from a previous job into my Roth IRA. It was only about $6000, but that’s $6000 that I now needed to pay taxes on.
- Charitable contributions- We did a poor job keeping track of our charitable contributions. We both volunteer a lot outside of our nonprofit jobs and we could have deducted mileage and other expenses that we incur when volunteering. We also donated several loads of items to Goodwill, but never collected the receipts. You’d be surprised by how much you can deduct when you itemize these donations.
- Rental expenses- Though we do a good job of keeping track of the direct costs we put into repairs on the homes we rent out, we did not track the mileage for driving to and from the homes and smaller costs like paint brushes or cleaning supplies.
Though I know we were new clients and we came to the firm towards the end of the season I also felt that our return was rushed. If it had been brought to our attention that we were going to owe we could have worked to gather more of the documentations some of the charitable contributions or rental expenses. Also, we hosted an exchange student and were surprised when I asked what our deduction for that was and she said nothing. I came home and researched it and found that in there in fact was a deduction of at least $50 a month we could have taken.
So do I gather more information and pay them to restate it?