I'm taxed out... literally and figuratively. Any ideas?

[MScott1851]

My husband and I are both ignorant doodie heads when it comes to taxes...I didn't have any 401K taken out this year, and I bumped us into a higher tax bracket, and I think we're gonna owe about $600. We will know for sure when that last W-2 comes in. I know that doesn't seem like a lot...but it's killing us if we're trying to close on a house this month.

This is my question... I make a lot more than my husband. So when we did our W-4's... I claimed Single and 0, and he put down Married and 0. That way we would be sure to overpay, and not have to cough up any cash to Uncle Sam. So where did we go wrong?!?!

Any helpful insights would be appreciated before I throw the TaxCut software out the window!

 

[janette]

It does help to use that 401K but you already know that.

I wouldn't stress about the money right now, file on April 15th and you have almost 3 months before you pay.

Turbo Tax will calculate what should be on your w-4, I imagine Taxcut will do the same. I did that last year because we were over withholding. I was a little worried but I've done some of my taxes and looks like we are going to be within $200 either way. That's just where I want to be so I'm happy with that.

You'll also get the benefit of the interest from your mortgage next year so even if you don't change anything you'll probably get a refund.

 

[Dan Murphy]

Did not go wrong, just more of your combined income is taxed at a higer tax rate than you had been reserving for during the year with withholding.........

http://www.givingto.msu.edu/pgaol/html/2003_federal_income_tax_rates.html

Income from 14K to 56K is taxed at 15%, over 56 at 25%. Let's say he had income of 50 and you had income of 58. His was withheld at 15 and most of yours was also. Combine them and total 106, and much is taxed at the higher rate. Not unusual at all when you combine dual incomes.

 

[Toby'sFriend]

Would either of you qualify to open or contribute to an IRA? You would have until April 15 2004 to fund the accounts for 2003.

 

[Christine]

Hey, don't feel bad. I ALWAYS have to pay. For the first time this year I'm getting an $84 refund. My DH's retirement is paid up front by his employer so we have no way to make his income look lower like with a 401K. I contributed 7% to my 401K this plus I had an additional $50 per month sent to Federal Tax. Plus I have 2 kids in daycare, a house, itemized deductions, etc. And I'm getting a lousy $84 back. I don't think we're that rich. My income reports at $59K and my DH's at $72K. We also claim Married with ZERO deductions.

 

[TammyNC]

I'm impressed that you all have gotten as far as you have with your taxes. I usually don't start ours until around April 10th. . I don't enjoy doing them and try to put them off as long as possible. We always owe by being self employed and pay estimates, so I know that we won't be getting a refund and I'm not sending in my $ to the gov. until the last minute.

 

[jel0511]

I'm going to tell you my story, then duck afterwards... I just did our taxes last night, and we're getting our usually $2k refund (starting to duck). I'm a stay-at-home mom and DH works in the city. His deductions are set at married with 12 dependents, and we still get a high refund. It does help that we have TONS of deductions, mortgage interest, HIGH property taxes, and those NYS income taxes, they are REALLY high. DH also gets a pretty large bonus once a year, which is withheld at a VERY high tax standard tax rate, which is why the deductions on his regular salary is so high. We usually pay almost our entire tax liability for the year with that one check withholding, so all other withholdings throughout the year are gravy. We've tried to raise the deductions with payroll, but anything over 12 dependents doesn't do too much, so we're stuck getting a large refund every year. Also, our capital gains hurts us as well, so one of the reasons we like to constantly pay in, or we'd owe big time!!! O.K. ducking down right now...... It also helps that both DH and I are both CPA's....

 

[Poohnatic]

I'll be seeing the usual refund as well. My first year as a Maryland resident, I was shocked that I had to pay state taxes, as NY pulled the right amount out. Maryland has piggyback county taxes that aren't usually deducted throughout the year. If I'd still been a NYS resident, I would have seen about 300 back!

My mom has done taxes for years, and she looked over my W2s. I've since had an extra 2 per paycheck for state deducted. I end up seeing about a 50 dollar refund from the state.

The fed is different, no extra deductions, but we always see money back. In Turbo Tax there is a diagnostic that you can do after completing your taxes that will help you to have less of a liability for next year.

Suzanne