Taxes

[pryncess527]

Our effective tax rate changed very slightly due to an increase in income last year, but our overall tax burden barely went up.

 

[mco65]

We typically try to hit the ZERO owed or refunded sweet spot but never seem to hit our mark.

Last year, we got some back, this year we are paying in a lot.

all I know is that I hate tax season regardless of whether I am getting money back or paying some in.. its a big PIA IMO. Not being a rocket scientist, I Have to pay someone to do my taxes.. does anyone else think this is a big problem?! argh!

 

[mrsp1030]

Going up a tax bracket will be a killer if you don't plan. We try to offset that by increasing donations and keeping track of those things. I do our taxes and it always kills me when it asks a ton of questions and then it says "you don't qualify for the child credit because you make over this income level".

 

[Momoftwins+1]

As some have said there are many variables to which your tax owing/refund can change year to year that none of us can know unless we knew your tax situation fully. I know I explain to my clients why their owing/refund changed year to year and help them prepare for how to make their next tax year a little less shocking if possible. However, I'm finding this year that a lot of people are taking full distributions from /401/IRAs etc and are getting hit with extra penalties or have capital gains from investments.
Just slight increases in income can cause interesting situations. You could have been teetering on the edge of a tax bracket, and the extra pushed you into the new one. You could have had a child that was elig. for daycare credit and not anymore, child reached 17, EIC elig. and not this year, reached a threshold where a credit is minimized or eliminated....etc
If you are thinking something is wrong, you can always have someone else look it over that knows taxes to make sure something wasn't missed. I would take last years documents and this years and put them side by side for page 1 and 2 of the 1040 (1040A ) and see what stands out first though.

 

[clh2]

If you are thinking something is wrong, you can always have someone else look it over that knows taxes to make sure something wasn't missed. I would take last years documents and this years and put them side by side for page 1 and 2 of the 1040 (1040A ) and see what stands out first though.

I agree with the side-by-side comparison!

 

[HLAuburn]

Thanks Everyone! I know it is not ideal to get $5000 back each year but I have done it that way in the past so we can use it has savings and either use the money for vacations or projects around the house. I'll have to look at the last couple of years tax returns and compare it to this year. Just really sucks when you are expecting something higher and it was so low. I'm glad we don't owe but if we both claim 0 you would think we would be getting back more then what we do.

We are in the same boat. Normally we get a pretty decent refund and we count on it for home projects or vacations. This year we are getting less than half back. The only reason I can see is that DH paid a lot less in taxes out of each paycheck, which is a good thing I guess, but we're not really sure why (no changes on our part, same pay etc).

 

[Kies99]

Our taxes were a quite different from last year, but this was due to our itemized deductions. We donated a lot less in 2013 than we did in 2012.

 

[Momoftwins+1]

We are in the same boat. Normally we get a pretty decent refund and we count on it for home projects or vacations. This year we are getting less than half back. The only reason I can see is that DH paid a lot less in taxes out of each paycheck, which is a good thing I guess, but we're not really sure why (no changes on our part, same pay etc).

Did he change his w4? Did HR change hands or paperwork get mixed up and possibly have his w4 with a higher number, therefore taking less taxes out of each paycheck?

I would have him check his w4 to make sure the correct amount you put down that he had originally calculated, one you are comfortable with.

 

[rockawaybeachgirl]

We are in the same boat. Normally we get a pretty decent refund and we count on it for home projects or vacations. This year we are getting less than half back. The only reason I can see is that DH paid a lot less in taxes out of each paycheck, which is a good thing I guess, but we're not really sure why (no changes on our part, same pay etc).

Without getting into a debate about ppl using taxes as forced savings, how much someone has taken out of their check each month is not inherently 'good' or 'bad'. What matters is your tax LIABILITY and whether that changes year on year.

Your income/deductions/credits/exemptions etc. determine your tax liability. That's how much you will owe the government. That's what 'matters'. If you have less taken out of your check in comparison to the prior year but nothing has changed your liability, then you will get back less (or owe). If you have more taken out each month and again your yearly liability is unchanged, you'll get back more (or owe less).

Having kids, getting a raise, making donations, paying mortgage interest - these things will affect your liability (the latter 2 only if you itemize). How much you have taken out each month is only HOW you pay, not ultimately HOW MUCH you pay.

If Person A and Person B both have the same liability, but A has more taken out of their check each month, they will have a bigger refund than person B (or owe less). But they didn't do any better than Person B, because ultimately they end up paying the same. Time value of money is the only difference, but in this interest rate environment it's immaterial on a one year horizon.

 

[manning]

I will get a $35.00 refund for 2012.

Yeah 2012. A lot went on in 2012 and I thought it got direct deposited. It didn't.
So, I get a letter a few months ago that I didn't file. We check our records and remember sending it. It must have disappeared in that great black hole called the post office. Luckily we get a refund. Am sending it in again but this time it will be return receipt requested.

 

[MAJPLO]

Did anyone get a much lower refund this year then compared to last year. Last year hubby and I got around 5000 back from federal this year only 1200. My mom is an accountant and she said we wouldn't get as much back this year but I wasn't expecting it to be like that. She said we did make more this year. Hubby and I both claim 0 for our checks but we have two kids. We have a house and our taxes and mortgage interest is pretty high so I just can't figure out why it is less then half of what we got back last year. Just wondering if this happened to anyone else this year.

Last year our accountant told us that the tax brackets were changing for 2012. So if everything stayed the same (income and deductions) we would have to pay more in taxes. We ended up making less and changing our withholding so we got more back instead. Unplanned but most welcome.

 

[chiefmickeymouse]

We owe again this year. Only about $1000, so better than last year. DS turned 17 and not being active duty military any more all equaled paying a bunch more taxes. I knew this would happen and tried to hit the no refund/no taxes due bracket, but missed by just a little bit. I hate tax season!

 

[njcarita]

first time we owe in years and years and years.......... $3000........

 

[crisi]

Its difficult for us to compare year over year without looking at the tax tables in some depth. This year we had a carry over loss from the sale of some stock, we got a SS tax refund because my husband switched jobs mid year and hit the cap - so the refund was big, but the amount of income tax..... One year we got hit with huge taxes because we exercised options. Even with our deductions relatively the same, we see big swings due to income.

 

[Green Tea]

What you get back or have to pay is irrelevant to what you pay in taxes.

If your tax due is $50,000 and you held $60,000 out via payroll, you will have a $10,000 refund. If you has $40,000 withheld, then you will owe $10,000. Either way its exactly the same.....You pay $50,000.

 

[4HppyCamprs]

What you get back or have to pay is irrelevant to what you pay in taxes.

If your tax due is $50,000 and you held $60,000 out via payroll, you will have a $10,000 refund. If you has $40,000 withheld, then you will owe $10,000. Either way its exactly the same.....You pay $50,000.

Yes and that is the very simplified version which I think we all know.

The "fun" begins when you add/subtract deductions and/or credits. Some are pretty much consistent and some change. We owe 322.00 to Fed and get 90.00 back from state. We moved though and so property tax and mortgage interest and such will be changed.

I am not really looking for answers here but find chatting about it interesting.

Sent from my iPhone using DISBoards

 

[borgthe]

Don't forget to factor in any 401K contributions. If you make less contributions this year compared to last, you will have a higher taxable income.