Home > Extra tax bill - ouch

Extra tax bill - ouch

January 6th, 2022 at 01:18 am

Two of our taxable mutual funds paid out particularly large year-end distributions. Along with other taxable investment income, it came to about 46K, as I said in my last post.

I sent that info to our CPA and he ran our numbers and we need to pay over 10K in taxes. We need to pay at least $9,400 by 1/18 to avoid an underpayment penalty.

We have the funds, so that's not an issue. I just wasn't anticipating a 10K bill.

I did log in tonight and turn off reinvestment of dividends and capital gains for the one fund. The other fund already paid out rather than reinvesting. So at least when this happens again 12/22, we'll have those funds to draw from to pay the taxes.

Oh well. My father the accountant always said it's better to make the money and pay the taxes than to not make the money at all.

6 Responses to “Extra tax bill - ouch”

  1. LivingAlmostLarge Says:

    That's what I tell all clients.

  2. disneysteve Says:

    He told me that back when I was a resident. I would constantly get offers to moonlight, working part time in a doctor's office. Many of my fellow residents said they didn't want to moonlight because it would put them in a higher tax bracket. I never understood that. Being in a higher bracket means you're earning more money. Sure you pay more in taxes but you still take home a lot more too. This was in 1991-1993 and we were getting $50-60/hr which was a lot of money back then. I grabbed every job I could manage and made a ton of money doing it. I didn't let the taxes stop me.

  3. LivingAlmostLarge Says:

    And you had too much student loans and a faster payoff!

  4. disneysteve Says:

    " And you had too much student loans and a faster payoff!"

    Definitely. I had just over 100K in loans to repay. I wasn't worrying about taxes. I was looking to take in as much income as I could to throw at that.

  5. Dido Says:

    yes--the phrase used in the industry is "Don't let the tax tail wag the dog."

  6. rob62521 Says:

    Better to make more money and pay more taxes...I totally get that. Sorry it came as a bit of a surprise, but as you said, at least you have the money to pay. A friend I know made more money one year, but didn't take that into account, and got his big time with a bigger tax bill. Except he hadn't put anything back and had to borrow money to pay his taxes. He's not the brightest bulb on the tree...

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