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Medical Bills / Tax Update

September 20th, 2012 at 07:21 am

**I was starting to think I could make mad progress on the mortgage this year. Just waiting to see how things settle out the rest of the year.

HA!

This is also one reason I am reluctant to invest aggressively outside of ROTHs. Once we build up a certain sum, that will be fine, but there is too much "need it now/need it NOW!" IT's going to take a while to work up to that - where I actually have monies that I might not need for 5+ years.

Anyway, just bills bills bills. As long as 15%+ of our income is going to medical bills, I don't have a lot left for the mortgage. But this is why I Was leaving final decisions to 12/31. I didn't want to put a chunk to the mortgage, and then be scrambling to pay bills.

So, we wait and see.

**The kids' dental visit actually wasn't too bad. They needed all kinds of sealants - I am happy to pay money for prevention. IT seems to be working - BM has outgrown his cavity-proneness.

So between checkups, x-rays, sealants (all times 2) the bill was $1k. Ugh! To be fair, I am sure I had $500 in the budget, so is only $500 more than expected. This on top of recent medical bills. & poof - $1500 *less* for the mortgage - in just one week.

They also reduced their no-insurance discount. Was 10%. Now is 8% by check or 5% by credit card. Will probably stick with the 5% by credit card (can get 2% off that, with the credit card reward). IT's all tax deductible for me - we itemize medical deductions since well over 7.5% of our income. So there is a 20% discount of sorts, on top of that.

Orthodontist wants to see him in 6 months. I will brace myself for that one!

This dental office has an ortho in-house, which is very convenient. BUT, we will shop around once they start recommending any real work. For one, this office is a bit of a drive. I think age 10 is when ortho talk tends to get serious, so I am gearing up for that next year.

**I thought as medical bills were mounting, that maybe I should revisit my tax calculation. I know I have been under-withholding a bit, BUT, the medical bills are a HUGE variable. The year before I got refunds - last year I owed a lot - only difference being the medical.

So I plugged in some better estimates, and relieved to see we will only owe about $900 for 2012. That is with 100% ROTH contributions - no reuglar (tax-deductible) contributions. Phew! I am fine with that. AMT would put us owing closer to $1500. OUCH!! I am quite sure AMT will be fixed. For reference, our income is low enough that the Feds only tax us about 3% on our entire income last year. AMT = the tax for the rich of the rich. Just to illustrate how broken AMT is. Rolleyes

**I think many assume that my tax bill is so low due to my tax knowledge. I suppose I make better tax decisions due to my tax knowledge. But I did not choose my job (employer had large tax-free compensation for many years), did not choose to buy a house, to marry, or to have kids, and to pay insane sums for medical insurance, due to the tax code. The way I live my life is just heavily incentivized. (Is that a word? Big Grin )

& so it continues! Because I worry next year that taxes will start to go steep, and at some point I will have to increase my withholding due to this refinance. & higher taxes. My "breakeven tax return" has turned into "owing $900" over the past few years - I haven't changed my withholding in ages. Mortgage interest deduction has been decreasing, etc.

& then it hit me - orthodontia will be a nice tax break for us. I just never had even thought about it before. SO, probably no need to change my withholding. One more thing I didn't choose for the tax break, but it will help us limp along with LOW taxes another few years.

2 Responses to “Medical Bills / Tax Update”

  1. DayByDay Says:

    Every kid I know who had braces at a young age ended up having to go through the whole process again when they were older teens, so I'd be cautious about that. I waited with my older son and am doing the same with the younger one.

  2. FrugalTexan75 Says:

    I made a visit to the dentist today as well, though thankfully nowhere near the amount you paid for the DS's.

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