Uh oh. I just got my W2 from my former employer in the mail . According to it, I made about $5,000 more last year than I thought I did.
How did I screw up so badly? When I was trying to estimate how much I made at my old company, I used the accounting on my last pay stub, which included compensation for my last span at work and also for my accrued vacation time:
|this period||year to date|
I assumed that the $24,499.98 included the $5,794.96. Way down at the bottom of the pay stub was this ambiguous note:
** YTD figures as of the last payroll processing
Which, I now understand, means that the $24,499.98 was the total before adding the $5,794.96 — which changes things quite a bit. Why they chose to report things in this bizarre and misleading manner, I don’t know. But the upshot is that I was relying on the wrong figure in doing my calculations. Because I similarly underestimated my 401k and other deductions, the actual difference between my estimate and reality is closer to $5,000.
$5,000 is enough to make a really big difference in my plan to eliminate my federal income tax burden. Back-of-the-envelope calculations suggest that instead of getting 100% of my paid taxes back as a refund, it may be more like 75%–84%.
If I had known the accurate number back early enough in I could have adjusted (for instance by spending $3,000 or so of that surplus on additional university classes). This, and a hefty IRA contribution, would have been enough to keep me below the line.
As it is, I can still make the IRA contribution, but that isn’t going to be enough, and it’s too late to do anything else that will make a difference to my numbers.
I’m of course embarrassed and very disappointed by this. For months now I’ve been crowing about how I’m not going to pay any federal income tax for , and now it looks like I have to eat that crow. That, and vow to keep closer tabs on my income in .