I would not normally do a Monday financial update for today since I do not get paid until this Friday but it is getting close to tax day and I just paid my taxes so took a bit of a hit.

Last year I did not adjust my withholdings due to my daughter turning 17. This is an important reminder to those of you with children that the IRS views a child dependent as under 17. You automatically lose the $2000 child credit when they become old enough even if they are still students and living in your home.

I did a bit of research and unfortunately we make too much money to offset the tax liability by contributing to a Roth or even a Traditional IRA. Unfortunately I had to take this hit to learn my mistake.

I knew that my withholdings were going to be off, but I did not realize by that much. So with a $3500 tax bill needless to say I was a bit upset. The good thing with Covid-19, not that there are many, was they delay in filing date.

That extension ends on Wednesday. I was hoping to pay by credit card and give me another month to put the money back into my emergency fund but the tax filing service wanted another $90 to file. No thanks, I will just use my savings and be done with it.

A Mental Setback

Mentally though, this is difficult for me. This brings my emergency fund down to about $7000 with another $3300 in investments and other accounts. It is still more than enough to cover an emergency but it will motivate me to put that money back immediately.

Since I am still paying off debt I have not grown my emergency fund. If you read last weeks updates, I paid off all my high-interest debt so now I can focus on my zero interest accounts. For the first month I plan on paying down my furniture account and then putting the money back in my savings.

This will set me back a bit, but I knew it was going to happen eventually and I have been prepared for it. My net worth did grow last month so things have balanced out. My job is secure and my wife is back to working a full schedule now, so we can keep doing what we were planning on not change the direction too much.

I have adjusted my withholding for year and have been contributing more to my 401k and my 457 plan. I am also enrolled in classes so that will offset a lot of my tax liability for next year.

Another thing that I have begun to accept is letting my checking account go below a certain limit. I will post in detail a bit more about this but recently I have been stressed seeing my checking account depleted down to less than $500.

This is, of course, due to my change in budgeting and tracking. The issue is accepting the change. We have more than enough money to pay all our bills but my budgeting method has been altered and I need to be okay with that.

My debt situation has not changed since last week so I will not post the update on that until next Monday. Just wanted to bring attention to the tax situation in case others were not aware of the age limit for dependents.