The Taxman Cometh

It's the time of year when envelopes start plopping into the mailbox from all one's financial institutions with weird codes that only the IRS could devise.  Interest income, earnings, mortgage interest, retirement accounts - each has its own special number so that the government can keep tabs on what we're worth, (and how much they can wrest from us).

My taxes this year will be more complex than ever before.  The sale of the Brooklyn chateau generated a capital gain which just falls within the guidelines to exempt me from paying tax (I hope).  Doubtless, I shall have to jump through myriad TaxCut hoops to prove that to the government's satisfaction.

Then we bought a house, just in time to benefit from the expansion of the First Time Homebuyer Tax Credit.  Now some of you may be smelling a rat here.  How can I be a First Time Homebuyer, if I just sold a house, right?  Well, I'm not.  But Eric is.  And apparently, I may be able to take his deduction (you should know he is on board with this).  If I've lost you at this point, and you're still interested, there's a Wall Street Journal article on the subject here.  Even if I can't take his deduction, then at the very least I should be able to get the existing homeowner deduction, which Congress handily passed just before our sale went through.


So far, so good.  But moving state will complicate matters.  Even though I haven't worked since I've been in California,  those of you who have been following these posts will know that I also have some investment income to declare.  Remember my foray into the stock markets?  Well it transpires that I am a reasonably successful "day trader".  Although I have yet to come anywhere close to replacing my former income (sadly), I have made enough to afford a wee ski trip to Squaw Valley over SuperBowl weekend (yippee!).  At least, I think I have.  I haven't yet worked out how much of my investment gains will be clawed back, which may yet come as a nasty surprise.

At any rate, I am delighted to report that my stock market experimentation has so far yielded a realized return some 10 times greater than the interest I am earning in my savings account. So thank you, Mr Buffet, I'm glad I took your advice.  (Also glad I bought your shares, as they are up a healthy 4.9% from September as of today's close)!

One thing I have learned, since venturing into the treacherous seas of short term investing, is that it requires a very strong stomach.  While the markets have not yo-yo'd in quite the same way that they did in the fall of 2008, there have been a couple of times when I thought I'd be writing off losses at tax time.  Fortunately, I appear to have dodged that bullet this year.

I haven't yet set aside the time to evaluate the full situation, but I am hoping that Uncle Sam may give us a windfall this year, which we'll obviously put towards the wedding.  After all, the tax code is largely designed to favor married couples, a throwback to the traditional view that marriage reinforces a stable society.

My investment goal for the next six months is already determined, however.  I have a (rather expensive) wedding dress to pay for.  You'll know if I made it when we post the wedding photos in July...