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02-13-2010, 04:13 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
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Tax specialists around?
Anyone on this board know the basic tax code reasonably well? I am still w*rking and just did turbo tax...
in 2008 our fed refund was $1800+
in 2009 our taxes owed are $2600+
That is a $4400 swing. I changed no allowances, no deductions removed, one credit was added in (stimulus) and still owe.
I use turbo tax. I cannot see my 2009 return until I pay for it, but in the year over year summary I see I paid $4000 less in taxes in 2009 that 2008. I changed NOTHING year over year in allowances. I do not expect such large fluctuations in tax returns year over year ($4000 is 3% of our income, more or less, which to me is a high change in taxes year over year).
I do claim around 14 allowances on my salary which was done to break even in years past (the $1800 refund was because I did not factor child tax credit into withholdings and we would have owed about $200 otherwise). Would the stimulus have reacted to that and withheld $4000 less?
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
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02-13-2010, 05:26 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Oct 2002
Location: Chattanooga
Posts: 3,895
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What is your filing status, box 1&2 on your W-2s and how many dependents do you have ? The fact that you paid $4000 less in tax in 09 as compared to 08 may be the issue here. Also you may actually want to go see a tax pro, as your 08 return may be incorrect ?
Just my two cents. Most people are clueless when it come to filling out a W-4.
__________________
Earning money is an action, saving money is a behavior, growing money takes a well diversified portfolio and the discipline to ignore market swings.
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02-13-2010, 05:56 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
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It might be useful to compare line items in both yrs...e.g. AGI, deductions, taxable income, tax, tax payments/credits, etc to see where the big differences are.
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02-13-2010, 06:52 PM
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#4
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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It could be AMT kicking in. Just a guess based on the limited info.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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02-13-2010, 07:29 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
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Bikerdude- Turbo tax did an AMT calculation and said I did not need to pay it. I have not seen the 1040 for 2009 because not sure if I want to file with TT or go to HR block for a second opinion.
I do not have many entries on the tax form, only schedule is schedule A for mortgage interest (within $100 of 2008) and property taxes (within $100 of 2008).
Income was within $1000 of previous year (lower in 09)
Taxes paid was $4000 less
I do claim 14 allowances on my income- worked for 2005-2008
something 2009 return did not like those allowances...
I calculated the allowances which withheld what I needed for W-4... if there is another way, feel free to educate me My guess is the stimulus said withhold X less for each allowance.
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
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02-13-2010, 07:34 PM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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The stimulus did change amount withheld. If you are married and spouse works that would be a double whammy of less withholding.
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02-13-2010, 07:55 PM
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#7
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Full time employment: Posting here.
Join Date: Mar 2007
Posts: 577
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Quote:
Originally Posted by jIMOh
Income was within $1000 of previous year (lower in 09)
Taxes paid was $4000 less
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Are you telling us you withheld $4000 less in 2009 vs 2008 and now you owe $4400? That is only a $400 swing with a less than $1000 change in income. Seems likely to be accurate (at least as accurate as last year).
I also claim more exemptions than the four of us as payroll dept gets a little excited about that change but I can change my additional withholding online without talking to anybody whenever I want so as I move through the year and see how bonus' and withholding are going and what's happening with DW income and withholding. I can change the additional amount withheld to match up with LY tax + 25-30% for any increase. I look at the real dollars withheld I don't look at one exemption or nine. Additional $5 a week or $400 whatever it takes to end up with close enough to expected tax owed so I don't get forced into doing estimated tax in future years.
__________________
I highjacked a rainbow and crashed into a pot of gold - Bon Jovi
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02-13-2010, 08:00 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Apr 2007
Location: west bloomfield MI
Posts: 2,223
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Quote:
Originally Posted by Darryl
Are you telling us you withheld $4000 less in 2009 vs 2008 and now you owe $4400? That is only a $400 swing with a less than $1000 change in income. Seems likely to be accurate (at least as accurate as last year).
I also claim more exemptions than the four of us as payroll dept gets a little excited about that change but I can change my additional withholding online without talking to anybody whenever I want so as I move through the year and see how bonus' and withholding are going and what's happening with DW income and withholding. I can change the additional amount withheld to match up with LY tax + 25-30% for any increase. I look at the real dollars withheld I don't look at one exemption or nine. Additional $5 a week or $400 whatever it takes to end up with close enough to expected tax owed so I don't get forced into doing estimated tax in future years.
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NO either I typed wrong or you misunderstood
2008 refund was about $1800
2009 owe about $2600
that difference is $4400
$4000 less was withheld but I changed NOTHING from 2005 to 2009 and in all other years I received a small refund ($1800 refund in 2008 was due to me not knowing we were eligible for child tax credit with newborn twins).
__________________
Light travels faster than sound. That is why some people appear bright until you hear them speak. One person's stupidity is another person's job security.
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02-13-2010, 08:30 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Only real way to tell is to compare your returns line by line and thn research what caused the differences.
I've nothing like your stability, so I pretty much never know what my tax return will look like. It looks like I will show a ~40% reduction in W2 income this year vs. last and all of a sudden I go from getting whacked with a high bracket, AMT and ineligibility for the child tax credit, Roth IRA contributions and a slew of other things to a lower bracket and all the goodies the vast majority of Merkins gets. The marginal tax when you move from low 100s income to high 100s is really high.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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02-13-2010, 08:30 PM
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#10
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Thinks s/he gets paid by the post
Join Date: May 2006
Location: Orlando
Posts: 2,657
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Going to HR Block would cost you $150 and probably just confirm what you already know. Go to another free tax website (TaxAct, for example) and see whether you get the same answer.
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02-13-2010, 09:07 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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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.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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02-14-2010, 12:11 AM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2005
Posts: 17,244
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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...
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02-14-2010, 12:29 AM
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#13
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Moderator Emeritus
Join Date: May 2007
Posts: 12,901
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I agree with Texas Proud. It sounds like this is a withholding problem. Somebody somewhere changed something. Was your monthly take home pay much higher in 2009 than in 2008 despite the fact that your gross income actually declined a bit?
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02-14-2010, 12:48 AM
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#14
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
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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
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02-14-2010, 03:17 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,722
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Warning bells are going off as I read this. It seems possible that 2008 was prepared wrong, and not enough was withheld this year. A couple of things to think about:
1. Withholding exemptions on your W4 are not what goes into 1040. That is where you put your real exemptions. If you put 14 in there last year, and don't have that many legal exemptions, you have a major problem.
2. The withholding tables changed this year. That accounts for some difference between 2008 and 2009.
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02-14-2010, 03:20 AM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,722
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Quote:
Originally Posted by brewer12345
Only real way to tell is to compare your returns line by line and thn research what caused the differences.
I've nothing like your stability, so I pretty much never know what my tax return will look like. It looks like I will show a ~40% reduction in W2 income this year vs. last and all of a sudden I go from getting whacked with a high bracket, AMT and ineligibility for the child tax credit, Roth IRA contributions and a slew of other things to a lower bracket and all the goodies the vast majority of Merkins gets. The marginal tax when you move from low 100s income to high 100s is really high.
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Are you self-employed? Maybe some of that income could be broken out into consulting on a 1099 this year.
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02-14-2010, 06:41 AM
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#17
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Moderator Emeritus
Join Date: Feb 2004
Location: minnesota
Posts: 13,228
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It looks like your withholding got screwed up because of two many exemptions/allowances.
Nevertheless, your total tax burden for the year, all things being equal, should not have increased. It is possible that you are paying a penalty for underwithholding.
__________________
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No more lawyer stuff, no more political stuff, so no more CYA
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02-14-2010, 06:53 AM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2003
Posts: 18,085
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Quote:
Originally Posted by target2019
Are you self-employed? Maybe some of that income could be broken out into consulting on a 1099 this year.
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Hah, no. DW is self employed, but her net is under 5% of our taxable income. I went from a high paying job in the private sector (with a large amount of pay being variable every year) to a non-private emplyer with a very steady (and lower) salary. Going forward I expect to see much more stability if I do not get fed up and head back to the private sector.
__________________
"All animals are equal, but some animals are more equal than others."
- George Orwell
Ezekiel 23:20
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02-14-2010, 07:18 AM
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#19
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Thinks s/he gets paid by the post
Join Date: Jul 2006
Posts: 1,901
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If its not too complex you could compare your net pay for each year. If it went up by say $70 a week in 2009 ($3,630 yr) then you withheld too little.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
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02-14-2010, 07:21 AM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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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.
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