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Old 02-14-2010, 08:54 AM   #21
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Originally Posted by Bikerdude View Post
OK, when you say allowances you really mean exemptions. With the tax stimulus average of $7 and change (per week per worker), I would think the number of exemptions probably increased the tax stimulus amount and that is your problem. Still just a guess.
exemptions are what you put on tax return
allowances are what you put on w-4 to instruct employer how to withhold taxes

I claimed 14 allowances
I claim only 4 exemptions (self, wife, twin boys)

the difference is that we have about 45k in schedule A deductions (mortgage interest, property taxes) and the allowances were to account for that 45k.
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Old 02-14-2010, 08:56 AM   #22
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Originally Posted by Texas Proud View Post
OK... let's try and narrow this down...

What was withheld in 2009 was $4K LESS than what was withheld in 2008

And you said you did not change your W-4?


The only thing I can think of is you check with your company... seems they calculated your withholding wrong...

Why did you not see this in your paycheck? I always look at my paycheck from one year to the next in order to see what the differences are... I would have noticed a big increase in take home pay... which is what you seem to have...

My wife handles day to day checkbook so she would spot this (my company does not even generate pay stubs anymore).

The stimulus is the reason for the change (making work pay should have paid everyone $800 more in payroll income because of $800 less in taxes taken out.
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Old 02-14-2010, 08:59 AM   #23
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Originally Posted by kaneohe View Post
Check out the first paragraph here:
The Making Work Pay Tax Credit

There are links to reducing any penalty related to the withholding change that was supposed to take place and also a check on withholding. Sounds like the changes would still be taking place in 2010 so you need to fix the withholding problem if that is the cause. I always found it easier to increase withholding by a fixed $$ amount per paycheck rather than mess around with changing exemptions because then you knew exactly what change would happen.

see also p. 2 here for possibility of waiving any penalty
http://www.irs.gov/pub/irs-pdf/i2210.pdf
good general info
read the first document entirely, it does not specifically show how the credit affects payroll IMO
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Old 02-14-2010, 09:02 AM   #24
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Originally Posted by LOL! View Post
Why not pay $30 for a copy of TT to put on your computer so that you can see what you are doing? You can even use it in November to help do a preliminary run of your 2010 taxes. I don't see a reason to go to H&R block unless you feel you are incompetent.
24 hours later I see it was the stimulus which caused the problem. I am now calling it an anti stimulus because now I need to pull $2600 out of my budget to pay this year's taxes, plus $2600 to make sure I break even next year.

When my politicians find out I took $5200 out of the economy, I wonder if they will understand the stimulus better?
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Old 02-14-2010, 09:05 AM   #25
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If your situation is not too complicated you can use a free estimating tool like the one at H&R BlockŪ - Taxes, FREE Tax Filing, Online Tax Preparation, Tax Software, e-file Taxes

Click Tax Tips and Calculators. Select Filing Status, fill in your age, put in your W2 amount of wages and then click Refund or Owe? Find Out Now and it will take to to a pretty accurate estimator. Follow the steps and at the end you'll get a summary and you can print it out or save it to compare to other estimates.

I work for H&R Block and we use this to help people see what to expect.

Or post your stuff here.

W2 Box 1
W2 Fed Withholding
Interest Income
Number of dependents and their ages
Mortgage Interest
Real Estate Taxes
Education Expenses (1098-T)

Other Income or deductible expenses
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Old 02-14-2010, 09:14 AM   #26
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I tried Turbo Tax as usual for my 2009 return and found that it would not allow my rollover of $3000 into an IRA because I'm over 70 1/2 years old. Congress passed a law late in 2009 which allowed repayment of any withdrawal you took in 2009. This is a one shot deal as part of the stimulus package but Turbo Tax has not caught up with this. I talked to a tax preparer at Jackson-Hewitt who told me that it was allowable, so I'm going to have them do my taxes next week and to heck with Turbo Tax.
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Old 02-14-2010, 09:24 AM   #27
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Originally Posted by jIMOh View Post
good general info
read the first document entirely, it does not specifically show how the credit affects payroll IMO
************************************************** ********
Check Your Withholding

How will the Making Work Pay tax credit affect you?

Most wage earners will benefit from larger paychecks in 2009 and 2010 as a result of the changes made to the federal income tax withholding tables to implement the Making Work Pay tax credit. However, some people may find that the changes built into the withholding tables result in less tax being withheld than they prefer.

If you're not eligible for the Making Work Pay tax credit, withholding changes could mean a smaller refund next spring. A limited number of people, including those who usually receive very small refunds, could in some situations owe a small amount rather than receiving a refund. Those who should pay particular attention to their withholding include:

Pensioners (see more information under Pensioners, below)
Married couples with two incomes
Individuals with multiple jobs
Dependents
Some Social Security recipients who work
Workers without valid Social Security numbers
The Making Work Pay tax credit, normally a maximum of $400 for working individuals and $800 for working married couples, is reduced by the amount of any Economic Recovery Payment ($250 per eligible recipient of Social Security, Supplemental Security Income, Railroad Retirement or Veteran's benefits) or Special Credit for Certain Government Retirees ($250 per eligible federal or state retiree) that you receive. If you are affected by this reduction, you should review your withholding to ensure that sufficient funds have been withheld to meet your tax obligation.

************************************************** *************

I thought it was well-written and pretty specific. They wanted to give married working couples $800 and implement it through withholding which meant you should have expected to see an extra take-home pay of of
$31 or every two weeks. (might have been a bit more if they didn't do this the whole yr) They also warned you that some folks might have more withheld than they wanted. I don't know if you ever said how much more in take-home pay you started getting.
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Old 02-14-2010, 09:29 AM   #28
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Originally Posted by JOHNNIE36 View Post
I tried Turbo Tax as usual for my 2009 return and found that it would not allow my rollover of $3000 into an IRA because I'm over 70 1/2 years old. Congress passed a law late in 2009 which allowed repayment of any withdrawal you took in 2009. This is a one shot deal as part of the stimulus package but Turbo Tax has not caught up with this. I talked to a tax preparer at Jackson-Hewitt who told me that it was allowable, so I'm going to have them do my taxes next week and to heck with Turbo Tax.
I must say that is cutting off your nose to spite your face. TT corrects its software all the time and will eventually get this. But you prefer to dump more money at the problem than wait for it to be fixed. Interesting.
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Old 02-14-2010, 09:39 AM   #29
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Originally Posted by kaneohe View Post
************************************************** ********
I thought it was well-written and pretty specific. They wanted to give married working couples $800 and implement it through withholding which meant you should have expected to see an extra take-home pay of of
$31 or every two weeks. (might have been a bit more if they didn't do this the whole yr) They also warned you that some folks might have more withheld than they wanted. I don't know if you ever said how much more in take-home pay you started getting.
most IRS pubs are written well. I took HR block's tax course in 2008 and I thought the IRS pubs were easier to understand than most of HR block's text books.

This isn't specific enough and it was not communicated "to me". Are you telling me I need to check the IRS web site daily for changes to my tax rates? That is not acceptable to me and should not be the expectation.

I realize I "owe" the $2600 and it is my responsibility to know the payroll and deposit information for myself. From 2005-2008 everything went well, then people screwed with it in 2009 and my personal finances take a hit. My biggest issue is I like steady state, and made no changes, and that cost me $2600. Had the withholdings just been lowered $800 by the stimulus everything would work out great. But even that got screwed up.
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Old 02-14-2010, 09:41 AM   #30
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Originally Posted by Sue J View Post
If your situation is not too complicated you can use a free estimating tool like the one at H&R BlockŪ - Taxes, FREE Tax Filing, Online Tax Preparation, Tax Software, e-file Taxes

Click Tax Tips and Calculators. Select Filing Status, fill in your age, put in your W2 amount of wages and then click Refund or Owe? Find Out Now and it will take to to a pretty accurate estimator. Follow the steps and at the end you'll get a summary and you can print it out or save it to compare to other estimates.

I work for H&R Block and we use this to help people see what to expect.

Or post your stuff here.

W2 Box 1
W2 Fed Withholding
Interest Income
Number of dependents and their ages
Mortgage Interest
Real Estate Taxes
Education Expenses (1098-T)

Other Income or deductible expenses
do you need the info from the tax return, or just my paycheck? We have two incomes.
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Old 02-14-2010, 09:45 AM   #31
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If you are going to game the system, then be prepared to have the system game you. We routinely do runs of tax-return software (April, June, August, November, December, January) that take just a few minutes to see where we stand. It helps with tax planning and decision making such as tax-loss harvesting, whether to use tax-exempt funds, foreign tax credit stuff and reduces our taxes by thousands of dollars through proper placement of investments.
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Old 02-14-2010, 09:47 AM   #32
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I see the NYTimes has filled out a complete tax return on their web site. I always get some ideas from looking at that.
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Old 02-14-2010, 09:52 AM   #33
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This isn't specific enough and it was not communicated "to me". Are you telling me I need to check the IRS web site daily for changes to my tax rates? That is not acceptable to me and should not be the expectation.

Had the withholdings just been lowered $800 by the stimulus everything would work out great. But even that got screwed up.
I totally agree w/ you that you shouldn't need to check the IRS web site daily but, at least IMHO, this was of general interest and communicated in our local newspaper.....that they wanted the $800 stimulus out, couldn't wait till tax time because it was more urgent, were going to implement it via withholding. I don't work so I didn't get affected by this but I would have assumed that $800 would have been prorated evenly thru the yr and would have wondered if it were take-home pay suddenly became abnormal.

Did you conclude that your payroll people made a mistake or that you were an unintended victim because of your particular circumstances? Sounds like there's a good chance that the penalty will be waived so you won't be paying any more than you should..........if true, then the only issue should be liquidity ....whether you had liquid funds available to pay.
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Old 02-14-2010, 09:58 AM   #34
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The stimulus payment should not have caused this much of a difference in withholding. If you and your wife both worked you each could have seen a $600 reduction in withholding (which totals $400 too much as joint filers were only entitled to a total of $800). But the withholding reduction at max would be $1200, unless you or your wife had more than one job. Something else got messed up in your withholding as the stimulus would not account for the $4000 difference in withholding.

I would check to see if you are paying a penalty for underwithholding and see if you can get the penalty waived (see post 14 for the link on waiver).
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Old 02-14-2010, 12:48 PM   #35
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Did you also get a big state tax refund for last year ?That adds back in as income for this year. Did you contribute more to your 401(k) or IRA's last year?

Part of what you owe might be your wife's FICA costs .

If you have been claimed 14 dependents and not paying quarterlies for the 1099 income it is not surprising that you owe.
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Old 02-14-2010, 01:02 PM   #36
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Did you also get a big state tax refund for last year ?That adds back in as income for this year. Did you contribute more to your 401(k) or IRA's last year?

Part of what you owe might be your wife's FICA costs .

If you have been claimed 14 dependents and not paying quarterlies for the 1099 income it is not surprising that you owe.
Thx for response

we have had 2 significant changes to taxes since 2005

In 2005 in Dec we moved to our current house and started a 30 year fixed mortgage which is about $40k in interest per year. That same time my wife started a new job and received about a 5k-10k per year pay increase. We had owned a home prior to this and I figured out allowances for my W-2.

In March of 2008 we had twins born, and I researched the 2 added deductions for the kids. I factored that in to break even and we received an $1800 refund that year (I did not know about child tax credit and that was NOT factored in).

I was OK with breaking even and getting 2k back per year on child tax credit.

401k percentage stayed the same (added 1% to wife's Roth 401k in addition to the 8% she sends to pre-tax 401k). Both of us have employers withhold FICA for us.

14 allowances is NOT 14 dependants

there is a chart to see how allowances affect witholdings. Allowances are claimed on a W-2
exemptions and deductions are tax return issues. Not a 1 for 1 correllation.
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Old 02-14-2010, 01:54 PM   #37
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Go get a second look for $30 from H&R Block. Basically they put your information into their software to determine if you had completed your taxes correctly. If not and you want them to finish it and file, the $30 goes towards the cost of the tax prep. You may want to take your last year's return in and have it checked as well.
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Old 02-14-2010, 02:50 PM   #38
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I found the error
TT is suggesting that my entire $5950 HSA contribution was made by my employer and not me.

I broke down and paid so I could see the return, now I need to find how to fix the problem or if I did last year's HSA incorrectly.
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Old 02-14-2010, 07:28 PM   #39
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a few other points-

my w2 shows more than $1000 less tax was withheld on 72k income year over year
wife's w-2 was less by about $800

plus the HSA was handled differently by turbo tax and listed differently on my w-2 year over year as well
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Old 02-14-2010, 09:02 PM   #40
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I must say that is cutting off your nose to spite your face. TT corrects its software all the time and will eventually get this. But you prefer to dump more money at the problem than wait for it to be fixed. Interesting.
Hey, I've got about $9000 coming back with the first home buyer tax credit and I don't want to wait forever. For a $100 at Jackson-Hewitt I can get it filed now and they know how to handle the $3000 rollover to the IRA. With that home buyer credit you have to do a manual filing and I know the IRS will look over everything carefully. I'm better off this year not using Turbo Tax. I'll go back to them next year. With Turbo tax, I emailed them about my problem, never heard from them, went into the online chat room and no one ever responded to my problem.
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