I had a mini-freak out moment yesterday.
We did our taxes weeks ago, since we had everything in order as well as the fact that we wanted our refund!
But I freaked out because I had a sudden thought that I may have overstated a deduction, specifically the deduction on property taxes paid (since we itemize).
The reason for the freak-out was because I didn’t keep good enough track of the month we paid a recurring cost.
Here’s the skinny.
We put down 20% on our house when we bought it, allowing us to avoid escrow. As such, we pay our own property taxes and homeowners insurance. To manage this, I add an equal monthly amount to an ING Direct sub-account that covers these costs. It also covers our homeowners association cost.
I got the reminder of our upcoming payment due for the association fees, and it popped into my head that I may have made the payment in the same month as one of our two property tax bills. This would be a problem because when I reported what we paid in property taxes, I used the monthly payout figures for the two months that the bills are due. If I had paid out the association fee as part of one of those payments, this meant I had potentially overstated this amount.
I had visions of re-filing tax returns and audits and everything else.
But, I checked and it turns out that I had paid the dues the same month as one of the expenses, but that it was our homeowners insurance. This bill never got looked at as part of tax time, so everything was cool.
Close call, though. Imagine how tough it must be for businesses to keep track of all these deductions and such!
From now on, I’m definitely going to do a better job keeping track of individual payments, even if I only make a couple per year. It’ll definitely save some uh-oh moments down the line!