I was surprised to calculate that I owed money on my taxes for 2024 for the first time in several years. The good news is that my investments performed well in the past few years. The bad news is that when I sold some shares to pay for my new windows, I realized capital gains that put me into a higher tax bracket.
I was pissed – for about 10 minutes.
I rechecked all my calculations to make sure they were correct. They were.
Then I wrote a check to the State of NC and paid them.
I will also need to make pay quarterly tax estimate payments throughout 2025 now in order to avoid a penalty from the state. That sucks.
My challenge is that I have no idea what my income will be in 2025. If I don’t have to sell investments, it will be very low because I’ll live of the remaining proceeds from what I sold in 2024.
If something unexpected comes up, I could get hit with capital gains tax again.
Here’s my rule about taxes. I pay them and try not to think about it once I cut the check.
I use software to calculate what I owe and to take advantage of any legitimate deductions. I don’t make enough to justify having a CPA or tax advisor work with me to create a tax minimization plan.
If I was wealthy I would absolutely use a professional to create tax shelters, offset gains with losses, etc. My understanding is that wealthy people pay much less (by percentage) than I do in taxes.
But I’m not wealthy. And I am under no illusion that the tax man is fair.