Anyone getting a lot less back in taxes?

[Pigeon]

I haven't finished our return, but we'll be getting less because of the dual income stimulus withholding issue. It doesn't surprise me because it quite well publicized and I'm fine with it.

 

[eeyoregon]

Count me in for the "getting a lot less" this year club. I owe over $2,000 compared to my $2,600 refund last year.

1st, my payroll screwed up my W-4 withholdings about 1/2 way thru the year = they stopped taking federal taxes out mid-year!! I never noticed a change in my take home but I also had a lot of changes thoughout the year like flexible spending account, 401K adjustments, etc.

2nd, my son turned 17 on December 26 = I lost the $1,000 tax credit for him . Since when is 17 yrs old no longer a child? He lived in my house the entire year. He won't graduate until summer 2011 at the age of 18 1/2 so I will be caring for him 100% this year and 1/2 of next year and all of last year. BS!! If he had turned 17 on January 1st, I would have an extra $1,000 in my bank account which is huge for this single mom, one income family.

3rd, I missed the earned income credit by $462 for our family of 3.

So, my taxes have been shoved in a drawer and I will revisit them sometime on April 15.

 

[deerhart]

TT told me I am going to owe about $7K-$8K this year, when last year we got a small refund! Same jobs, income about $15K higher. How can we owe half the increase in taxes?!?! We didn't change our witholding, and I didn't think the one they did automatically would change things THAT much!

So yes, getting less back - as in OWING TONS instead!!!

Depending on your income level, that could have thrown you into AMT range.

Or, if you were right on the edge of one tax bracket and got bumped up to another, your going to have a HUGE tax jump.

Also remember if you haven't yet put money in IRA's you can still do that until April 15 and still claim it on last years taxes.

 

[Lisa_M]

I just did my taxes last night and I owe $2k. I thought I would break even or get a little back. I just don't get it. Last year I owed 1500, but that situation was unique, but still to owe this year. We have worked so hard to build up a little savings now that DH works minimal hours and out the door the WHOLE thing will go. It's very frustrating. We were moved into the next tax bracket by $1400. That was my summer work last year. I just shouldn't have worked, we would have owed less.

 

[winniedapooh]

TT told me I am going to owe about $7K-$8K this year, when last year we got a small refund! Same jobs, income about $15K higher. How can we owe half the increase in taxes?!?! We didn't change our witholding, and I didn't think the one they did automatically would change things THAT much!

So yes, getting less back - as in OWING TONS instead!!!

That was us last night too...we went to have our taxes done and I am still in shock! I picked up an extra job, gave more than we usually do, and thought we would get less back...never thought we would owe for at least another 3-4 years as we start losing deductions for the kids. The tax guy we have used for the last 12 years looked miserable as he told us. Told us we were in the majority of middle class that gets...well you know the word I am looking for!!!

 

[winniedapooh]

I just did my taxes last night and I owe $2k. I thought I would break even or get a little back. I just don't get it. Last year I owed 1500, but that situation was unique, but still to owe this year. We have worked so hard to build up a little savings now that DH works minimal hours and out the door the WHOLE thing will go. It's very frustrating. We were moved into the next tax bracket by $1400. That was my summer work last year. I just shouldn't have worked, we would have owed less.

That was what I was saying last night...working a little to get ahead put us behind!!!

 

[DISdreamin']

Depending on your income level, that could have thrown you into AMT range.

Or, if you were right on the edge of one tax bracket and got bumped up to another, your going to have a HUGE tax jump.

Also remember if you haven't yet put money in IRA's you can still do that until April 15 and still claim it on last years taxes.

We were on the end of a tax bracket, but with deductions we should be in the same one as last year. The AMT thing I can't figure out, but I can't see how the increase in income could have such a huge effect...maybe that's it.

And yes, for those who mentioned the new witholding, I was aware of that and referenced it in my original post. I knew we would either get back less than last year or end up owing a little because I opted not to change our witholding to compensate (I thought we'd be at about the break-even point), but our swing was over $10K, from ~$3K tax refund to owing ~$7K!! Our income went up by about $15K and our deductions will be essentially the same as last year. I'm just in shock.

Here's what I don't understand. If we do bump up into the next tax bracket, my understanding was that only the amount over the threshold would be taxed at the higher amount. For example, if you pay 15% up to 35K and then 18% from 35K-45K (imaginary numbers), if you make 36K, the first 35K would be at 15% and only the last 1K would be taxed at the higher rate of 18%. If this is how that works, the math just doesn't seem right for how our taxes worked out.

Anyways, they'll go off to our accountant as usual. I just like to get an idea of where they'll be so we aren't in shock when they come back. Thankfully, this year our income should be at the same level as a couple years back, so maybe next year we'll be back to being almost even.

 

[Purseval]

Or, if you were right on the edge of one tax bracket and got bumped up to another, your going to have a HUGE tax jump.

No you aren't, that's not how our tax system works. To keep it simple, let's say there were 3 tax brackets: 10%, 20% and 30%, 3 income brackets: $10,000, $20,000 and anything over $20k, and no deductions. So pretend you made $21,000. You would pay:

10% of $10,000 - $1000
20% of $10,001 to $20,000 - $2000
30% of $1000 - $300

So by making that extra $1000 your effective tax rate would jump from 15% to 16.5%

 

[wdwfan16]

Count me in for the "getting a lot less" this year club. I owe over $2,000 compared to my $2,600 refund last year.

1st, my payroll screwed up my W-4 withholdings about 1/2 way thru the year = they stopped taking federal taxes out mid-year!! I never noticed a change in my take home but I also had a lot of changes thoughout the year like flexible spending account, 401K adjustments, etc.

2nd, my son turned 17 on December 26 = I lost the $1,000 tax credit for him . Since when is 17 yrs old no longer a child? He lived in my house the entire year. He won't graduate until summer 2011 at the age of 18 1/2 so I will be caring for him 100% this year and 1/2 of next year and all of last year. BS!! If he had turned 17 on January 1st, I would have an extra $1,000 in my bank account which is huge for this single mom, one income family.

3rd, I missed the earned income credit by $462 for our family of 3.

So, my taxes have been shoved in a drawer and I will revisit them sometime on April 15.

Your son was born just 5 days before the end of the year. You only supported him for 5 days when the IRS gave you a full year write off for him.

The person whose son was born 6 days later had to support him for a complete year before they got the tax credit.

So you got your money for him 17 years ago and then get it this year. It all evens out in the end.

 

[DISdreamin']

No you aren't, that's not how our tax system works. To keep it simple, let's say there were 3 tax brackets: 10%, 20% and 30%, 3 income brackets: $10,000, $20,000 and anything over $20k, and no deductions. So pretend you made $21,000. You would pay:

10% of $10,000 - $1000
20% of $10,001 to $20,000 - $2000
30% of $1000 - $300

So by making that extra $1000 your effective tax rate would jump from 15% to 16.5%

After doing a little reading, the above is evidently NOT how the AMT works. And next year, when the AMT threshold will apparently be lowered (2010 tax year) - I don't even want to THINK about what we're going to owe in taxes. It's just icky.

 

[taximomfor4]

Our taxes seem all messed up in Turbo Tax. We seem to be getting back way more than we should be. I'm half tempted to try another software or H&R Block to double check TT!

OMG, I was going to say the same thing. I submitted it yesterday after obsessively entering and re-entering all the info trying to make sure. I am worried about getting so much back.

I don't mean to make anyone feel bad, I am glad to get a refund instead of owing, but I am worried that something is wrong in tt, and I'll end up in trouble!

 

[prncess674]

Nothing changed here and we are getting about 40% less back and we did adjust our withholdings.

I think you are confusing things. A refund is an overpayment of tax. To compare apples to apples you need to look at your tax bill (Line 44 on a standard 1040) from 2008 and 2009. If your income is exactly the same last year as this year these two numbers should be similar. You adjusted your
withholding, so you paid less towards your tax bill over the year. Why would you expect your refund to be the same if you adjusted your payments?

 

[LovableGluttons]

I think you are confusing things. A refund is an overpayment of tax. To compare apples to apples you need to look at your tax bill (Line 44 on a standard 1040) from 2008 and 2009. If your income is exactly the same last year as this year these two numbers should be similar. You adjusted your
withholding, so you paid less towards your tax bill over the year. Why would you expect your refund to be the same if you adjusted your payments?

I don't understand how that would work either??

 

[prncess674]

I don't understand how that would work either??

Your tax bill is your tax bill. How much you pay towards it is a separate issue. If your tax bill is $3,000 and you pay $4000 over the year thru payroll deductions then you get $1,000 back. If you only pay in $2500 via payroll deductions you owe $500.

 

[Purseval]

After doing a little reading, the above is evidently NOT how the AMT works. And next year, when the AMT threshold will apparently be lowered (2010 tax year) - I don't even want to THINK about what we're going to owe in taxes. It's just icky.

The AMT goes by a different set of rules, my example was for regular tax brackets. AMT was originally made because some people were using loopholes to pay no tax at all. As in the case of the original amendment that created the income tax in the first place, it was voted in thanks to people who always thought it would apply to the other guy and didn't realize it would just be a matter of time before it hit them harder than the people they thought they were "getting even with" in the first place.

 

[tink_n_pooh]

We are in the same boat as the PP who is paying in a ton this year

Our income hasn't changed but we did change our withholdings thinking that since we bought a house we would get more back this year (itemizing rather than standard deductions). The difference in our withholdings amounts to $1050 a year, I would be fine with owing that $1050 back but no... we owe more like $2-4K depending on which tax software we used

We were able to get the $8K back with our taxes last year since we bought our house early enough in 2009 we were able to claim it on 2008's taxes. We finally got the refund in October of this past year and now we will just be paying it back to the government.

So much for tax breaks

 

[TheCampbells]

there was a thing they did where they gave everyone an extra about 10 dollars per pay period but really they were giving you a bit of your tax refund in incrememnts a little early... it accounts to about 750$ i believe could that have affected any of you?

They gave my brother $17 a week since April back in his check and then the same for his wife. He usually gets $1000 back at taxes, he now owes $1700

The extra money they gave throughout the year is screwing the middle class now that is tax time.

 

[prncess674]

We are in the same boat as the PP who is paying in a ton this year

Our income hasn't changed but we did change our withholdings thinking that since we bought a house we would get more back this year (itemizing rather than standard deductions). The difference in our withholdings amounts to $1050 a year, I would be fine with owing that $1050 back but no... we owe more like $2-4K depending on which tax software we used

We were able to get the $8K back with our taxes last year since we bought our house early enough in 2009 we were able to claim it on 2008's taxes. We finally got the refund in October of this past year and now we will just be paying it back to the government.

So much for tax breaks

It sounds like you qualified for the first time home buyers tax credit hence the big refund. That is a one time rebate. It is all about the math, if you bought a small dollar low value house then your interest deduction still may be less than the standard deduction. You should have run the numbers before adjusting your withholdings. Also, you should verify that you didn't tick the box that said "take the itemized even if lower" on the tax software. Buying a house doesn't always guarantee that your tax bill will be lower.

As stated before COMPARE APPLES TO APPLES, look at your total tax not your refund. You could claim 25 witholdings on your W-4 and not pay anything through out the year and it wouldn't change how much your tax bill is at the end of the year.

 

[LovableGluttons]

Your tax bill is your tax bill. How much you pay towards it is a separate issue. If your tax bill is $3,000 and you pay $4000 over the year thru payroll deductions then you get $1,000 back. If you only pay in $2500 via payroll deductions you owe $500.

Sure, that's a no brainer. If the PP adjusted her witholding so that more was taken out, if her tax rate stayed the same, and she paid in more, then why would her obligation to the IRS be larger?

Perhaps fewer deductions?

If the income and tax burden remained the same, and the witholding was changed to send more in with each pay period, then other than fewer deductions, why would the tax bill go up?

That's why I don't understand.

 

[prncess674]

Sure, that's a no brainer. If the PP adjusted her witholding so that more was taken out, if her tax rate stayed the same, and she paid in more, then why would her obligation to the IRS be larger?

Perhaps fewer deductions?

If the income and tax burden remained the same, and the witholding was changed to send more in with each pay period, then other than fewer deductions, why would the tax bill go up?

That's why I don't understand.

The poster did not give us this information. Let's take a simple example of someone whose AGI stayed the same. In 2008 AGI was 50,000 hence the tax due would be $6701

http://www.irs.gov/pub/irs-prior/i1040gi--2008.pdf
(see page 74)

If 2009 AGI was the exact same 50,000 the tax due would be $6,669

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf
(see page 82)

The poster probably had some other change in AGI which accounts for the change in tax due. As previous posters have said do a side by side comparison by section and the difference should be easily attributeble. could be anything from medical expense deduction, student loan deduction, number of depenedants, earned income credit, large charitable contribution. Just because your w-2 income didn't change other things can change too.