This year my taxes are driving me crazy.
I have to file in two countries since I’ve spent several years living abroad. This instantly makes things more complicated since I have to worry about two countries and I’m not familiar with the tax code in one country.
Additionally, in the US, I’m filing “married filing separately” due to personal reasons. This seemed fine until I started the process with TurboTax. You know what “married filing separately” is? The worst idea ever.
When you don’t file “married filing jointly” you lose out on a ton of benefits. I can’t use the student loan interest I paid. Even worse than that, I can’t contribute to a Roth IRA for the year because my income is over $10,000. Yikes, what? I had no idea there was a rule where contributions are in excess if you make over $10,000 and file “married filing separately.” Apparently the income limits only apply to “married filing jointly” couples. Blah.
I’ve called the IRS a couple of times (they are actually really helpful) and basically I can either pay a crazy penalty/tax or just withdraw the money I put into my Roth IRA for 2012 without penalty. I’m obviously going to choose the second option, though it literally pains me to take money our of my Roth IRA. Future me is going to be PISSED.
However, I’m kind of excited about the idea. If I take out what I contributed for this year I could just lump sum pay off my student loans. It doesn’t make total sense with interest rates but I don’t have another place to invest the money currently. I do not have a 401k available to me. Roth IRA is clearly out for the moment. Plus, getting rid of my debt once and for all is tempting, especially since I have to take the money out anyway.
Obviously this wasn’t my first choice but it could work to my mental benefit. After freaking out over my taxes at first I’ve finally come around to see the more positive benefits of the situation. It’s not the end of the world.
Taxes are a bummer no matter what country you live in these days. Don’t you agree?