Tax question, why the heck do i have to pay?

[Mike Hawk]

Maybe someone can help me out cuz im pissed after going through turbotax.
Im married and my wife and I both claim 0 on our w-4 when we first got hired and filled out tax stuff. I thought by claiming 0 then they take out the most so you dont have to pay at the end?? now combining our salaries its around the 60k mark so it might have to do with being in a different take bracket or something, because last year she made $15,000 less than this year and last year we got like 2 grand back in taxes.

Were is the cutoffs for different tax brackets, cuz im confused on why i have to pay like a thousand bucks to uncle sam

[joerockhead]

1st - Go through everything and ensure you truely filed it properly.
2nd - Paying is ALWAYS better then getting $ back. That money is yours and if you get a crap load back, you have given the Gonverment a FREE loan.

But double check all your papers and math and deductions.
Without all the info, it is tough to answer your question.

[Mike Hawk]

ok, the thing is i dont have any deductions, we dont own a house or anything and we use the EZ forms, ill see whats goin on here

[Dax]

ok, the thing is i dont have any deductions, we dont own a house or anything and we use the EZ forms, ill see whats goin on here

You might want to make sure you're claiming at least 2 exemptions, that's $ 6,600 plus your $ 10,300 for married filing jointly.

Oh yeah, make sure you get that $ 50 back for your federal telephone excise tax this year. That goes to most everybody.

[gwballin]

Based on what you wrote:

AGI 60,000
Personal Exemptions (6,600) - assuming you file jointly
Standard Deduction (10,300) - again, assuming you file jointly
Taxable Income 43,100

According to the tax table provided by the IRS you tax on 43,100 is 5,714. Your marginal tax bracket is 15% but your effective tax rate is only 9.5%.

Unless something unusual is going on the above should be pretty close to what the software came up with since you don't have any adjustments, deductions or credits that you have made us aware of.

[gwballin]

You might want to make sure you're claiming at least 2 exemptions, that's $ 6,600 plus your $ 10,300 for married filing jointly.

Oh yeah, make sure you get that $ 50 back for your federal telephone excise tax this year. That goes to most everybody.

beat me to it

[brad8266]

Your tax shoud be 5714 for the year, how much tax did you have withheld?


I dont know why you are claiming 0 exemptions anyway for withholding, thats pretty dumb, your just giving uncle sam more money as a interest free loan.

[Dax]

beat me to it

Sounds like you must be doing or have recently done yours also.

How many of you guys/gals use Turbotax or another software program? I've never tried it, but a friend of mine with child and mortgage uses it and swears by it.

[gwballin]

Sounds like you must be doing or have recently done yours also.

How many of you guys/gals use Turbotax or another software program? I've never tried it, but a friend of mine with child and mortgage uses it and swears by it.

Preparing tax returns is one of my job responsibilities. I don't do many individuals anymore, but once you learn the stuff it doesn't go away. I hope to get mine done sometime this week, if not I will not get to it until 4/17.

I have gone thru the IRS free file the last 3 years which allowed me to prep and e-file my return with turbotax for free. I think that the program is pretty good and asks a lot of questions to make sure that you don't miss any deductions or credits. I would recommend it, especially if you have a "cookie cutter" tax return. However (shameless plug here) it will never replace tax professional when things get complicated.

[Dax]

Preparing tax returns is one of my job responsibilities. I don't do many individuals anymore, but once you learn the stuff it doesn't go away. I hope to get mine done sometime this week, if not I will not get to it until 4/17.

I have gone thru the IRS free file the last 3 years which allowed me to prep and e-file my return with turbotax for free. I think that the program is pretty good and asks a lot of questions to make sure that you don't miss any deductions or credits. I would recommend it, especially if you have a "cookie cutter" tax return. However (shameless plug here) it will never replace tax professional when things get complicated.

I see- you're a pro, eh? Good stuff. That must be a tough way to make a living. A lot of people have weird misconceptions about taxes, for example, their friend Sally Rotten Crotch claims eighteen kids and gets all these breaks, so they think that they should, as well. Plus, like banking, people don't take kindly to mistakes when their money is involved.

I've been filing my own since I had to file. Anything new that comes up sometimes takes a lot of time and research to learn, but I don't mind doing this because I want to understand exactly what it is I'm signing. But, I definitely see the value in professional help for people in complicated circumstances, or just too busy or uninterested in doing it themselves.

[brad8266]

I use turbo tax and I do mine on paper too to verify it all. Doing taxes is easy, it just takes a few hours to do in most cases.

[gwballin]

I dont know why you are claiming 0 exemptions anyway for withholding, thats pretty dumb, your just giving uncle sam more money as a interest free loan.

Obviously not, since he owes additional tax this year.

[gwballin]

I see- you're a pro, eh? Good stuff. That must be a tough way to make a living.

Not sure what you mean, it is true that the hours can be long sometimes but it is not like I'm digging ditches (now that is a tough way to make a living). I think I'm compensated fairly which also helps.

A lot of people have weird misconceptions about taxes, for example, their friend Sally Rotten Crotch claims eighteen kids and gets all these breaks, so they think that they should, as well .

Before I started with the firm I'm currently with I worked in the taxpayer education department of the IRS doing my best to clear up some of those misconceptions. Lots of generally smart people's brains just shut down when the topic comes up and it always surprised me that they did not want to know more about an issue that affects them daily.

Plus, like banking, people don't take kindly to mistakes when their money is involved.

We don't make mistakes at my firm .

But by the time a partner gets the return to sign off on, it has been reviewed so many times that the return is as perfect as it is going to get based on the info provided by our clients.

I've been filing my own since I had to file. Anything new that comes up sometimes takes a lot of time and research to learn, but I don't mind doing this because I want to understand exactly what it is I'm signing. But, I definitely see the value in professional help for people in complicated circumstances, or just too busy or uninterested in doing it themselves.

That is one of those misconceptions you mentioned earlier. People actually think that when they pay someone to prep the return they are not responsible for the info. when they sign it. It doesn't matter who preped the return, when you sign it the IRS goes after you if it was done wrong so I'm glad to see that at least you take it seriously enough to know what you are signing.

[Dax]

gwballin- In your experience and opinion, what are the most common mistakes that people make when it comes to taxes?

Also, and this question applies to everyone here,, where do you stand on the big refund vs. don't pay taxes until you have absolutely have to debate? I see pros and cons to both views, although personally I enjoy having at least a bit of a refund coming back (if possible).

[gwballin]

gwballin- In your experience and opinion, what are the most common mistakes that people make when it comes to taxes?

Two big mistakes come to mind. The first I ran into a lot when I was with the IRS, people will purposefully underreport expenses/deductions because they think it will prevent them from being audited.

Now that I work for an accounting firm the biggest mistake I see clients make deals with tax planning. They will set up transactions before talking to us and then at the end of the year we have to research exceptions to the rules to make it fit the way they want it to. If they would just call us a head of time we could tell them how to structure transactions to get the desired tax effect and we would not have to charge them so much for the research latter.

Also, and this question applies to everyone here,, where do you stand on the big refund vs. don't pay taxes until you have absolutely have to debate? I see pros and cons to both views, although personally I enjoy having at least a bit of a refund coming back (if possible).

I think it depends on the individual. Some people are not disciplined enough to save. By having extra withholdings from their paycheck they get this huge chunk of money that they otherwise would not have since they would spend it as soon as they get it.

Most of my individual clients are responsible for estimated tax payments since they do not have withholdings. As a firm policy when I calculate those payments I make sure that the payments are just enough to prevent that client from having a penalty for underpayment. Those people usually owe quite a bit of money at the end of the year but we have advised them that it is better to hold on to your money as long as possible before having to pay. Even if they are due a refund we always have it applied to the following year's liability so our clients never actually see the money.

I personally will have a relatively large refund but it is due to a change in filing status and some bonuses that were over withheld on that happened so late in the year that it was too late to do anything about.

[Mike Hawk]

ahhh man so when i start this new job in a week then i should claim "2" instead of "0" on the W-4 when i have to fill out new hire paper work? what exactly with claiming 2 do to my paycheck instead of 0? does it have to do with being married?

[gwballin]

Increasing the number of exemptions on your W-4 will decrease the amount that is withheld in income tax.

So to answer your question about what you should do, it depends on what you want the result to be.

[Mike Hawk]

ya, we both are claiming "0" because i wanted them to tax the most so we didnt have to pay in the end, but thats not what happend i guess

[Nastyfoot]

Maybe someone can help me out cuz im pissed after going through turbotax.
Im married and my wife and I both claim 0 on our w-4 when we first got hired and filled out tax stuff. I thought by claiming 0 then they take out the most so you dont have to pay at the end?? now combining our salaries its around the 60k mark so it might have to do with being in a different take bracket or something, because last year she made $15,000 less than this year and last year we got like 2 grand back in taxes.

Were is the cutoffs for different tax brackets, cuz im confused on why i have to pay like a thousand bucks to uncle sam

You don't have a house or kids huh?

[brad8266]

ya, we both are claiming "0" because i wanted them to tax the most so we didnt have to pay in the end, but thats not what happend i guess

how much federal tax was actually withheld from your pay? Was it close at least?