A strange year for us...whereas we usually fluctuate between owing a few hundred dollars or getting a couple back, this year had some real wild cards.
We built a new house, got screwed by a contractor for tens of thousands, our daughter got pregnant with twins while her husband was medically unable to work. Short story: we cleaned out three IRAs to keep us all afloat. Neither my wife nor I are old enough to withdraw traditional IRAs without penalty, so we got creamed by the IRS.
The first tally of the 1040 was a shade under $10,000 in the hole. After some serious digging by an accountant, we discovered we could claim my daughter's children as dependents, since we had supported them while neither parent could work. Downside was that she would lose the (what wiseass named this?) earned income credit of $5500 she was eligible for since she couldn't work for the last few months of her pregnancy.
I had no idea our government paid you to have babies when you can't work. We eventually took the big tax hit, let her file for the EIC, and she gave us the check to offset the huge tax bill we owed.
So we're down to under $5k in the hole and strangely, feeling almost good about it. There's just a part of me that feels a little dirty taking advantage of the handouts I feel philosophically opposed to...I'm rationalizing by telling myself these are the kind of situations the EIC program and others like it were designed to alleviate.
And FWIW, our accountant wryly congratulated us on stepping into (hopefully briefly) the top 10% of taxpayers (by adjusted gross income) in the country. Somehow I thought it would feel better to be rubbing elbows with the wealthy...
