Anybody else loan Uncle Sam big $$$

[laurence]

So we're still getting used to DW being a consultant from home instead of a wage slave like me - she stayed home to take care of the kids and ended up making a nice little business for herself. But the calculations for quarterly estimates was done wrong for the second year in a row! Bottom line, we started with getting back 13k in Fed and State taxes, and after SEP IRA, we are getting a whopping $15,000 - dumb! Still between that and the "W" rebate for almost $2k (we have 2 kids) we feel temporarily rich, even though this is less than 10% of the liquid portfolio. Now DW is hinting she likes this big rebate thing, despite knowing it's an interest free loan.

Anybody else like getting big returns? Use it despite knowing you're loaning money for free? DW has agreed to lower her estimate checks and put the difference in the SEP all year long. But I think we'll still end up with $4-5k next April.

 

[Notmuchlonger]

No, i don't like getting big returns. It means they had more of my money I could have been doing something with.

 

[FinanceDude]

I owe, even with quarterly estimates.........oh well, Uncle Sam GAVE ME a loan for a few months.......

Some extraordinary things happened in 2007,not likely to be an issue in 2008.......

 

[podey]

I'm getting back about $2,700 but I had some self employment income for the first few months of the year and had alot of deductions. Gonna sit pat until I have a "clean" year in 2008 to see what I get back.

$15,000, that's a big refund!

 

[sarahsays]

I'm getting back about $5500 total from state and fed. I'm still not quite used to figuring out my taxes now that I own a home. Deducting the mortgage interest this year was a real surprise!

 

[SecondCor521]

Nope. I try to be as rational as I can be about such things.

I think this year I got a refund from the feds for a few hundred dollars, and had to pay a little bit to the state. I think I changed my withholdings by 1 allowance in the appropriate directions in an effort to get closer to zero next year.

Aside: For some reason, my state's withholding tables are more aggressive than the federal ones, so that if one claims the same number of exemptions on the W-4 for federal and state, it is possible -- typical, even, if you're trying to hit a $0 balance due -- to owe the feds and get a refund from the state. So now I claim X federal and X-2 state.

I also have a bent towards simplicity, so my plan is to just tweak my withholding by 1 allowance each year after I do my taxes until I get to the point where I just owe a little to both. That way I have minimal effort, no zero-percent loans to the government, and no worries about underpayment penalties. This assumes a stable tax picture (same home, same # of kids, same job, etc.)

Even though I like simple, I do occasionally check by doing a projected return partway through the year to see if I'm on track to hit close to zero.

2Cor521

 

[Kronk]

$17,200.

I had a six-figure business loss from the sale of a business. I bumped my W-4 to withhold the minimum, but I still had $14,700 withheld. The extra $2,500 was a loss carryback to our 2006 taxes.

 

[ziggy29]

Yeah, about $1900. Mostly because I increased withholding to account for what I thought my wife would earn in self-employment, but she fell considerably short. As a result, I was overwithheld. Now I'm reducing withholding to just above our tax burden last year, just to make sure we're within safe harbor.

 

[JustCurious]

I try to adjust our withholding so that I either owe 3 figures come tax time, or get a refund in the 3 figure range. Either way, it's close enough for me.

 

[tryan]

$4700

Got a lesson in EIC (earned income credit)from my accountant. Apparently earned income below 15k is a real "sweet spot" with the IRS. No way to get paid early thou.

 

[bssc]

556 from Uncle, which is about right since I had the opportunity to sell a few stocks for losses at the end of December.

 

[W2R]

Just $1395, which is kinda big. I like having a big tax return (within reason), because it helps me to save and because it makes me smile on the day I get it. I realize I am losing interest on it but I don't care!

 

[Zoocat]

Heck no. I owed $4500, federal & state. I was negligent with my quarterlies this year.

 

[W2R]

Heck no. I owed $4500, federal & state. I was negligent with my quarterlies this year.

How does that work? Will you have IRS agents taking you off in handcuffs, or fine you, or just send you a nasty letter, or nothing? I have never done quarterlies (though would imagine that I'll probably have to in ER) and have no idea of what the IRS would do.

 

[podey]

How does that work? Will you have IRS agents taking you off in handcuffs, or fine you, or just send you a nasty letter, or nothing? I have never done quarterlies (though I'll probably have to in ER) and have no idea of what the IRS would do.

I underpaid in quarterlies last year and they fined me $20.

 

[W2R]

I underpaid in quarterlies last year and they fined me $20.

Whew! That's not so bad at all. Thanks.

 

[SecondCor521]

$17,200.

I had a six-figure business loss from the sale of a business. I bumped my W-4 to withhold the minimum, but I still had $14,700 withheld. The extra $2,500 was a loss carryback to our 2006 taxes.

Kronk,

I'm assuming you set your federal exemptions at 10. I am not an expert, but I believe it is possible to set your federal exemptions higher than 10 provided you have a reasonable basis for doing so -- and I've always thought that it seemed reasonable to have your allowances set higher if you still manage to have enough withheld to cover your taxes owed.

Many years ago, I had my federal allowances set at 14 and was still getting federal refunds. This was due to having my somewhat large and fairly regular profit sharing bonuses taxed at the top marginal rate. I never had any problems either with my employer at the time or the IRS.

Do note that the IRS can check up on you and if it determines you're trying to avoid paying your taxes (perhaps by massive deliberate underwithholding) they can force you to claim fewer allowances (even down to zero, I think), perhaps forever.

2Cor521

 

[Zoocat]

How does that work? Will you have IRS agents taking you off in handcuffs, or fine you, or just send you a nasty letter, or nothing? I have never done quarterlies (though would imagine that I'll probably have to in ER) and have no idea of what the IRS would do.

I use TurboTax, so after it calculated everything it told me I had to pay a $100 fine! Bummer! My own fault though because I didn't pay extra when I sold some mutual funds and also found out I had some big dividends.

 

[FinanceDude]

How does that work? Will you have IRS agents taking you off in handcuffs, or fine you, or just send you a nasty letter, or nothing? I have never done quarterlies (though would imagine that I'll probably have to in ER) and have no idea of what the IRS would do.

The fine is pretty small. However, I would rather pay a small fine than overpay by a large amount........

 

[RunningBum]

I got $8K back. I think it was because I had been taking extra out of my check extra month and had planned to sell more stock options before the end of the year, but decided to hold off. I also had to be conservative because last year I underpaid a bit, and had more income, so if I owed again this year there'd be a penalty.

I'm thinking of switching to quarterly estimates rather than trying to balance it out with payroll deductions. My goal is to be dead even.

 

[Fireup2020]

My goal is to be +/- $200 total to fed & state. Missed the mark this year ($950 back from fed, owed NJ $263)...we'll play this game next year too..

 

[aaronc879]

Heck no. I owed $4500, federal & state. I was negligent with my quarterlies this year.

I never heard of "quarterlies". Is that something rich people need to do?

 

[laurence]

Unless you count us as rich, no. DW is self employed, so there is no "employer" taking withholdings out. She has to estimate her tax liability and is supposed to pay every quarter. We think we have it down now and next year should be the usual 1k + or -

 

[podey]

I never heard of "quarterlies". Is that something rich people need to do?

Quarterly estimated tax payments

EDIT: Oops, laurencewill beat me to it.

 

[Walt34]

No, we try to break even. Last year we got $74 back from federal, paid $14 to state. I think that's about as close as anyone can get. This year we got $500 back from fed due to an unexpected deduction, $71 back from state. Still pretty close.