Whoa! What the heck happened here? (tax related)

[MomRN]

I should probably know more about this than I do, but I don't.

When we filed taxes for 2009 I had just finished nursing school and my husband did not have a job. Our tax refund was $5,000+. In 2010, my husband still did not have a job, but I worked full-time the full year and our refund was $3,000+. For 2011, I worked full-time, and he got a job halfway through the year and our refund was around $2,000.

Now, through tax estimate calculators it appears we will have to pay several hundred dollars!

I wasn't expecting this, and I'm not sure it's figuring everything in. Maybe I'm jumping the gun a bit, but I wanted to be prepared for what would likely be a substantial decrease... but not owed! What the heck happened?

Okay, well I know one thing that happened... we don't claim the 18 year old step-daughter like we did for 2011. Plus our gross income together is slightly more... I assume that puts us in a higher tax bracket?

I may commit a faux pas here, but since no one here knows me and I'd like an idea od what to expect... together my husband and I made $77,000. We paid nearly $6,000 in federal taxes. We have one child. No child-care expenses. No mortgage. However, we have spent thousands of dollars in health-care (especially if you consider the amount paid for health insurance) and I contribute to a 403B.

Does it look bad for us?

 

[twinboysmom]

I am not an expert but from somebody who always has to pay, I am guessing you will indeed have to pay some. You may be able to deduct some of your medical expenses but most health insurance is usually not deductible unless you purchase it yourself (there are other exceptions of course). You also have to have more than I believe 7.5% of your adjusted income of unreimbursed medical to deduct. 6k seems like a pretty low amount of federal. Good luck and hope for the best. We ALWAYS pay and it is never just a few hundred bucks.

 

[clh2]

Why aren't you claiming your step-daughter like last year? I would bet that is where most of your "difference" is going to be.

Also - is your step daughter in college this year? Are you able to take advantage of the Opportunity Credit? There is some info here

Also - is your 6000 just what your withholding was? It may just mean that you need to adjust your withholding for next year. Contributing your maximums to your 403B and whatever your husband can contribute will also help to minimize the taxes you pay in future years.

 

[davedmaine]

I should probably know more about this than I do, but I don't.

When we filed taxes for 2009 I had just finished nursing school and my husband did not have a job. Our tax refund was $5,000+. In 2010, my husband still did not have a job, but I worked full-time the full year and our refund was $3,000+. For 2011, I worked full-time, and he got a job halfway through the year and our refund was around $2,000.

Now, through tax estimate calculators it appears we will have to pay several hundred dollars!

I wasn't expecting this, and I'm not sure it's figuring everything in. Maybe I'm jumping the gun a bit, but I wanted to be prepared for what would likely be a substantial decrease... but not owed! What the heck happened?

Okay, well I know one thing that happened... we don't claim the 18 year old step-daughter like we did for 2011. Plus our gross income together is slightly more... I assume that puts us in a higher tax bracket?

I may commit a faux pas here, but since no one here knows me and I'd like an idea od what to expect... together my husband and I made $77,000. We paid nearly $6,000 in federal taxes. We have one child. No child-care expenses. No mortgage. However, we have spent thousands of dollars in health-care (especially if you consider the amount paid for health insurance) and I contribute to a 403B.

Does it look bad for us?

Ask your accountant. It's difficult to know looking in.

 

[North of Mouse]

If you only paid almost $6,000, that seems low to me, you probably didn't have enough with held.

 

[jsmith]

If you only paid almost $6,000, that seems low to me, you probably didn't have enough with held.

Yeah your withhold is way low. I get not claiming the step daughter if he alternates years with her mom or she is out on her own-but you definately need to raise with holding-i make about 8K a year less than you and my withholding for 2012 was over 10K-and im expecting we will have to pay.

 

[3boymthr]

Here is a list of 2012 tax brackets. I'm guessing that you did indeed move to a new bracket. One of the things I noted was that for married filing jointly the tax jumps from $1,740 plus 15% to $9,735 plus 25% when income moves up from 70,699 and under to $70,700+

http://www.cbiz.com/page.asp?pid=9483

I'd say that unless you have a significant number of deductions with only $6,000 paid in on withholdings that you are definitely going to have to pay possibly way more than a couple of hundred dollars.

 

[4HppyCamprs]

It seems low to me as well. My husband makes 76-78k annually and we pay 6000 to fed BUT we get education credits and have 3 small children to claim to offset taxes owed. We also have mortgage deductions and a second home interest deduction. You would need to consult a tax consultant to find out exactly where the credits went but it seems like it was not enough contributed and not enough deductions. We are in the 25% tax bracket.

ETA: DH also contributes to a retirement plan.

 

[MomRN]

I don't have an accountant, I usually do all my taxes on-line myself. Although, this year I may need one...

I know it's difficult to see by a quick glance, but it helps seeing others state our withholdings were too low. I am the majority wage earner and I did not claim for the year. My husband has less earnings, but he claimed 3 so his tax amount was very low. I did not realize how low until I saw his final paystub. Guess that will need to change this year.

I guess this is welcome to middle class. For 2009, when we made $28,000 and paid in $2,800... we got almost $6,000 back (and we didn't claim step-daughter that year either). I realized as income went up and we no longer qualified for EIC, and other tax breaks expired, that we wouldn't get those several thousand dollar refund checks any longer.

I just didn't realize we would owe. Time to get more educated and try to figure out the happy medium.

 

[palmbeachmom]

Forgive me for asking a dumb question, but in 2009 if you only paid 2800, how on earth did you get 6000 back? As for the current year, in your situation, I'm betting you will probably pay around 12-1400. Change what they are withholdings now so you don't get slammed when you file for 2013. Good luck

 

[4HppyCamprs]

Forgive me for asking a dumb question, but in 2009 if you only paid 2800, how on earth did you get 6000 back? As for the current year, in your situation, I'm betting you will probably pay around 12-1400. Change what they are withholdings now so you don't get slammed when you file for 2013. Good luck

That would be Earned Income Credit.

 

[Aaeolien]

Forgive me for asking a dumb question, but in 2009 if you only paid 2800, how on earth did you get 6000 back? As for the current year, in your situation, I'm betting you will probably pay around 12-1400. Change what they are withholdings now so you don't get slammed when you file for 2013. Good luck

Welcome to the goofed up tax code. Makes a ton of sense right?

 

[Halbleib1]

I should probably know more about this than I do, but I don't.

When we filed taxes for 2009 I had just finished nursing school and my husband did not have a job. Our tax refund was $5,000+. In 2010, my husband still did not have a job, but I worked full-time the full year and our refund was $3,000+. For 2011, I worked full-time, and he got a job halfway through the year and our refund was around $2,000.

Now, through tax estimate calculators it appears we will have to pay several hundred dollars!

I wasn't expecting this, and I'm not sure it's figuring everything in. Maybe I'm jumping the gun a bit, but I wanted to be prepared for what would likely be a substantial decrease... but not owed! What the heck happened?

Okay, well I know one thing that happened... we don't claim the 18 year old step-daughter like we did for 2011. Plus our gross income together is slightly more... I assume that puts us in a higher tax bracket?

I may commit a faux pas here, but since no one here knows me and I'd like an idea od what to expect... together my husband and I made $77,000. We paid nearly $6,000 in federal taxes. We have one child. No child-care expenses. No mortgage. However, we have spent thousands of dollars in health-care (especially if you consider the amount paid for health insurance) and I contribute to a 403B.

Does it look bad for us?

Sounds to me like you will not be getting a refund this time around. And you probably are in a higher tax bracket as well. If we did not have itemized deductions(from mortgage interest, property tax, as well as local and state income tax) as well as two children for the child tax credit we would not get anything back either. Our income is less than yours but not low enough for the earned income credit. Everyone hates taxes but nothing we can do about it unfortunately. Good luck.

 

[MomRN]

Welcome to the goofed up tax code. Makes a ton of sense right?

So, since it is likely we will have to pay, won't know the amount until I get all the paperwork together... does anyone know anything about extensions and/or payment plans?

 

[Aaeolien]

So, since it is likely we will have to pay, won't know the amount until I get all the paperwork together... does anyone know anything about extensions and/or payment plans?

I am pretty sure you can file for an extension if you need it as long as you file that before the deadline. I've never had to do that so I'm not 100 percent sure.

 

[Halbleib1]

Welcome to the goofed up tax code. Makes a ton of sense right?

Their income was probably low enough to qualify for the earned income credit which is an offset of what they paid toward social security and other federal paycheck withholdings such as medicare.

Every year people bash those getting money back from the earned income credit but it is a lack of understanding of what the credit really is. Until a couple of years ago I did not understand it either. You can not get it unless you worked. If you were unemployed and collecting unemployment or on welfare for the whole year you can not claim it. Also if I recall correctly 2009 had the making work pay credit as well. That gave married couples back 800.00 as well. I believe there was also an additional credit from that for those with children.

As far as 2010 that year also had the making work pay credit which is probably where that refund came from. As long as one of them had some sort of income that year from a job.

 

[MomRN]

If we did not have itemized deductions(from mortgage interest, property tax, as well as local and state income tax)

State and local tax can be deducted? That will take a few thousand off.

There is an issue (long story, for another thread, basically an issue of taking the time to get it straight and hasn't happened yet) with the house. The mortgage is still in my deceased grandmothers name. The deed is in my dads name. However, we live here and pay the mortgage (I know this is a no go since it's in her name) and the property taxes... I wonder if those would count?

Yeah, so going to need more than Turbo Tax this year.

 

[lisateaches]

Well, now I'm depressed. We totally jumped into a new bracket.

 

[Halbleib1]

State and local tax can be deducted? That will take a few thousand off.

There is an issue (long story, for another thread, basically an issue of taking the time to get it straight and hasn't happened yet) with the house. The mortgage is still in my deceased grandmothers name. The deed is in my dads name. However, we live here and pay the mortgage (I know this is a no go since it's in her name) and the property taxes... I wonder if those would count?

Yeah, so going to need more than Turbo Tax this year.

State and local can only be deducted if you have enough to itemize deductions. If your standard deduction is higher than you will want to take that. You can't claim the property tax since they are not legally yours until the house is put in your name. Legally you would be considered more of a renter until all that is changed over to your name.

 

[Halbleib1]

That would be Earned Income Credit.

As well as the making work pay credit. Also if they had another child other than the stepchild to claim that would have brought down what they owed in tax. You can not get a refund from that but it can reduce the amount of tax you owe.


Either 2009 or 2010 it reduced our tax down to zero because my husband was unemployed and our tax liability was so low. One of those years we did not pay any tax but we also did not get anything back because all of his income was from unemployment and not from working. Therefore we did not qualify for EIC or the making work pay credit. He was unemployed for over a year and I do not recall which year was which without looking it up.