Budget Buster! Anybody else having to pay in on their federal taxes this year?

[sam_gordon]

Let's keep in mind refunds and money owed are just to "catch" up on what you've done over the year. Let's say you OWE $520 come tax time. That means every week $10 more should have come out of your check to go to taxes. The reverse is also true. If you get a refund of $520, you should have gotten $10 more every week.

We generally get refunds, but we itimize and between mortgage interest & child care expense deductions and credits, that's what makes up the difference.

 

[traces7]

Yep..have to pay again...we both claim 0, and DH has $80.00 extra a month taken out and we will still owe $283..not as bad as previous years, but still...I don't get it..we make the average household income and follow all the guidelines and still have to pay. Plus..did you all notice that even though they lowered SS tax 2% they raised Fed witholding? sneaky sneaky...out of my big $25.00 a paycheck raise, I bring home $13.00 more...I should just mail my money to China and avoid the middleman..

This is where I'm confused, not sure if I should adjust our withholdings for this year, because now they're automatically taking more out. I think I'm going to have a little more taken out of my paycheck just in case and then if we get a big refund next year, that will be ok, as long as we don't have to pay in again!

 

[DMickey28]

See I don't get this? We always owed before we had the kids and bought a house. Then we had one kid and still rented and owed A LOT less than usually but still owed. My DH W-2'd more those years too.

Now we own a house and have a 2nd child and finally are getting a refund. My DH does not claim 0 either, I believe he claims 3.

 

[disneychrista]

Plus..did you all notice that even though they lowered SS tax 2% they raised Fed witholding? sneaky sneaky...out of my big $25.00 a paycheck raise, I bring home $13.00 more...I should just mail my money to China and avoid the middleman..

The making work pay ($400) credit expired, meaning for 2011 we in effect will pay $400 MORE in taxes, then we did in 2009 & 2010.

 

[diznee25]

Dh and I have owed taxes since we got married. We make pretty good money, don't have children, and don't own a house. We really need to make a change so we don't owe (or owe less) next year.

I've read that people are taking more out of their paycheck (pre-tax) to the IRS, but I was wondering if increasing our 410k plans would be just as beneficial. Does anyone know? I figured having extra money in my 401k would be better than just giving it to the IRS....

Thanks for any input.

diznee25

 

[sam_gordon]

I've read that people are taking more out of their paycheck (pre-tax) to the IRS, but I was wondering if increasing our 410k plans would be just as beneficial. Does anyone know? I figured having extra money in my 401k would be better than just giving it to the IRS....

Thanks for any input.

diznee25

I don't think adding money to your 401K would be JUST as beneficial if you're looking at it from a 'how much money I owe come tax time'. If your company is set up the same as mine, 401K comes out before they factor in how much to take out for taxes.

So, let's say your paycheck (before withholding) is $2K. You put $100 into a 401K. So they're going to calculate your taxes on $1900. If your tax rate is 15%, $285 will be withheld. Now, double your 401K... now taxes will be calculated on $1800. Now $270 will be withheld.

The problem is how much money you owe on the year vs. how much money you've paid in taxes in each check. Take how much you "owe" with taxes, divide by the number of paychecks you get in a year, and that shows how much more should be withheld for taxes. Talk to your HR department about getting that number right.

 

[dfchelbay]

I'm so upset! I just roughly did our taxes and it looks like we have to pay in $473 this year! UGHHH! I'm not even going to file them until way later than!

I'm not sure why this happened! Last year DH was unemployed most of the year, he worked all this year. He made double what I did. And they took way more federal taxes out of his paycheck $2299, they only took $625 out of mine. So I think that's why we have to pay in. But than last year we had less taxes taken out because of the Making Work Pay thing. I'm so confused on what to do next year so we don't have to pay in.

Has anyone else had this problem? Last year we got back $1100 from federal, we did make about $13,000 more than last year though. I'm really disappointed I was hoping for some kind of refund. We don't make a lot of money, I'd say we're in the lower lower middle class!

Well, I guess that makes you one of the ones earning more than $250,000.00 per year. You should not complain about having to pay, since you earned over a quarter of a million dollars in 2010. You should feel lucky that you are 1/4 of the way to being a millionaires and stop complaining about this pesky small amount you have to pay, compared to the huge salaries you and your spouse took home. I mean seriously, what's $473 when you have $250,000.00 of spending money. Now you're just being petty.

In case you didn't pick up on my sarcasm...we're in the same boat with those that continue to pay more and more in taxes, yet bring home less and less net income per year. This entire subject matter ticks me off.

 

[cm8]

Well, I guess that makes you one of the ones earning more than $250,000.00 per year. You should not complain about having to pay, since you earned over a quarter of a million dollars in 2010. You should feel lucky that you are 1/4 of the way to being a millionaires and stop complaining about this pesky small amount you have to pay, compared to the huge salaries you and your spouse took home. I mean seriously, what's $473 when you have $250,000.00 of spending money. Now you're just being petty.

In case you didn't pick up on my sarcasm...we're in the same boat with those that continue to pay more and more in taxes, yet bring home less and less net income per year. This entire subject matter ticks me off.

I agree

 

[twinboysmom]

Well, I guess that makes you one of the ones earning more than $250,000.00 per year. You should not complain about having to pay, since you earned over a quarter of a million dollars in 2010. You should feel lucky that you are 1/4 of the way to being a millionaires and stop complaining about this pesky small amount you have to pay, compared to the huge salaries you and your spouse took home. I mean seriously, what's $473 when you have $250,000.00 of spending money. Now you're just being petty.

In case you didn't pick up on my sarcasm...we're in the same boat with those that continue to pay more and more in taxes, yet bring home less and less net income per year. This entire subject matter ticks me off.

I agree as well!!! We are nurses. While some people think we make loads of money, obviously the IRS included, we don't. Especially now since we mostly rely on my husbands income. The poster that was kind enough to let us know how nice a refund they were getting with their eic's just really made me mad. I out that in my first post but went back and edited. Didn't want to offend others. Ok rant over.

 

[Dax]

We got back less this year as well then we did last year...After looking at it, I figured out its the unemployment $2400 "break" that did it. I was unemploed MOST of 2009. I payed taxes on my unemployement even though I did not need to. So the taxes I payed on the $2400 I got right back! On top of my income being less..I was on unemployment this year for 2mo, which was NOT tax free...so that made a difference...we had a $3200 refund last year...this year...$2996..we also made more in 2010 than in 2009..

We both claim married but at highest single, Claim 0, and also both have an extra $10 taken out..We use this money in Feb as our Christmas fun money..well a small amount. Some is also used for stock up shopping and such..

Hopefully it balances out this year..

 

[Dax]

Yep..have to pay again...we both claim 0, and DH has $80.00 extra a month taken out and we will still owe $283..not as bad as previous years, but still...I don't get it..we make the average household income and follow all the guidelines and still have to pay. Plus..did you all notice that even though they lowered SS tax 2% they raised Fed witholding? sneaky sneaky...out of my big $25.00 a paycheck raise, I bring home $13.00 more...I should just mail my money to China and avoid the middleman..

I thought something was odd there....I think my checks were all of a $3 difference with this change...VERY wrong.

 

[Lisa loves Pooh]

We are expecting that we will owe. We will deal with how we will pay once we file. We do have options--but we knew based on a decision made last year that we would owe. Yay us. But we felt the decision to be best for our family.

No plans to owe next year though.

 

[Jeff_G]

Grrrr Yes for the first in many we owe this year, about $1200. The wife started working and they did not pull enough out of her check to make up for both of our incomes. So I have manually calculated it this year claim 0 and have $50 taken out of each check... We are also contributing more to pretax retirement plans.

You should have seen the calculations before congress extended the "evil Bush Tax cuts", we would have been hit with AMT and owed about $3400

 

[sherry7]

Thanks for the advice. Yes the health insurance is deducted from my paycheck pretax, so than you can't claim it right? We don't really have many deductions to take. Our home is almost paid for, so we can't even claim mortgage interest anymore. We take the standard deduction because all our itemized deductions come up to less than the standard. I think I'm going to take our taxes in to a professional and get some advice on what to do and also see if they can find any other deducitons. I know it will cost a lot, but just thought I'd give it a try. Anyone know what they charge if you take your taxes in to a professional?

I think this is going to depend on where you live, and where you go. We live about 1 hr from Pittsburgh, and use a small private CPA. We pay $90, and that includes our federal (long itemized form), state, and local returns. In contrast, H&R Block charges quite a bit more than that. I think some people are sometimes surprised that a private CPA is sometimes less expensive than H&R Block.

 

[traces7]

Well, I guess that makes you one of the ones earning more than $250,000.00 per year. You should not complain about having to pay, since you earned over a quarter of a million dollars in 2010. You should feel lucky that you are 1/4 of the way to being a millionaires and stop complaining about this pesky small amount you have to pay, compared to the huge salaries you and your spouse took home. I mean seriously, what's $473 when you have $250,000.00 of spending money. Now you're just being petty.

In case you didn't pick up on my sarcasm...we're in the same boat with those that continue to pay more and more in taxes, yet bring home less and less net income per year. This entire subject matter ticks me off.

Why would you think we make $250,000 a year, we made way less than $60,000 (my husband and I combined). I'd say that we're lower middle class. So to us $473 is a lot of money! Also we have had our hours cut and haven't had raises in 5 years, so we're living on less too! The only reason we made more this year is because DH worked this year, last year he was laid off 1/2 the year.

I am happy that we don't have to pay in thousands like some people, it's just that we don't have a lot of extra money.

 

[traces7]

I think this is going to depend on where you live, and where you go. We live about 1 hr from Pittsburgh, and use a small private CPA. We pay $90, and that includes our federal (long itemized form), state, and local returns. In contrast, H&R Block charges quite a bit more than that. I think some people are sometimes surprised that a private CPA is sometimes less expensive than H&R Block.

Thanks for that advice, I was thinking of going to a local CPA, they sound like they will sit down with you and help you with your situation. I was hoping they could give us advice on how to have to avoid paying in next year.

 

[sam_gordon]

This should be an interesting exercise...

On your 2011 return (or your software might give you a summary page with the information)...

Adjusted Gross Income
Taxable Income
Total Tax

Divide the Total Tax by the AGI and multiply by 100. Now, find your 2009 tax form and do the same thing. I've done a rough cut on our taxes for 2010 (still waiting on a bunch of forms) and it looks like we'll pay about 8%. By comparison, my 2009 was 2%.

Now, we did make about 25% more in 2010 than we did in 2009, so I'm willing to pay a little more.

 

[diznee25]

I don't think adding money to your 401K would be JUST as beneficial if you're looking at it from a 'how much money I owe come tax time'. If your company is set up the same as mine, 401K comes out before they factor in how much to take out for taxes.

So, let's say your paycheck (before withholding) is $2K. You put $100 into a 401K. So they're going to calculate your taxes on $1900. If your tax rate is 15%, $285 will be withheld. Now, double your 401K... now taxes will be calculated on $1800. Now $270 will be withheld.

The problem is how much money you owe on the year vs. how much money you've paid in taxes in each check. Take how much you "owe" with taxes, divide by the number of paychecks you get in a year, and that shows how much more should be withheld for taxes. Talk to your HR department about getting that number right.

Thanks for the info, I'll have to look into it!


diznee25

 

[arihillfarm]

The making work pay ($400) credit expired, meaning for 2011 we in effect will pay $400 MORE in taxes, then we did in 2009 & 2010.

Yes, but payroll taxes were reduced by 2% for this year. If you do the math, anyone making 20K a year will see a $400 reduction in their taxes (or technically staying the same from 2010 with losing the MWP credit and getting the 2% reduction) and anyone making more than that will see an even larger tax reduction.

-Astrid

 

[disneychrista]

Yes, but payroll taxes were reduced by 2% for this year.

But everyone will still see a $400 increase in FEDERAL taxes. Social security taxes are a different thing completely.