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.
Tax specialists around?
- Thread starter jIMOh
- Start date
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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.
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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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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.
OP
OP
jIMOh
Thinks s/he gets paid by the post
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.
OP
OP
jIMOh
Thinks s/he gets paid by the post
do you need the info from the tax return, or just my paycheck? We have two incomes.
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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.
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.
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).
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).
lemming
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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.
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.
OP
OP
jIMOh
Thinks s/he gets paid by the post
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.
frayne
Thinks s/he gets paid by the post
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.
OP
OP
jIMOh
Thinks s/he gets paid by the post
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.
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.
OP
OP
jIMOh
Thinks s/he gets paid by the post
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
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
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.
Part of that is the stimulus (I think its $400 for you and your wife)
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So did you update your TT tonight? Isn't the problem fixed already?
I'd save myself from wasting $100.
TomCat
Recycles dryer sheets
Turbo Tax is great...but it does not "suggest" anything. TT (and all tax software) only compute taxes based upon where and how you input your data into the program.
Good choice to pay the $30 so you can review the detail and identify your mistake...or answer your question as to why 2008 and 2009 are different. Do a side-by-side comparison and the issue will be clear.
As a former tax guy at one of the large accounting firm I occassionaly think I have found a TT software error...I have learned to look more carefully at my input and perhaps re-read the tax rules...error is normally mine.
Also, be sure to update online as TT continues to update software...particularly during early part of filing season (January).
Tax software is somewhat "dangerous" if you have any complications as it always prepares a tax return that "looks" fine...but can contain user input errors that will often go undetected.
If you have multiple income sources or other complications I would suggest using a tax preparer...remember...you have no real idea if YOU have prepared a correct return or not...
TomCat
OP
OP
jIMOh
Thinks s/he gets paid by the post
Turbo Tax is great...but it does not "suggest" anything. TT (and all tax software) only compute taxes based upon where and how you input your data into the program.
Good choice to pay the $30 so you can review the detail and identify your mistake...or answer your question as to why 2008 and 2009 are different. Do a side-by-side comparison and the issue will be clear.
As a former tax guy at one of the large accounting firm I occassionaly think I have found a TT software error...I have learned to look more carefully at my input and perhaps re-read the tax rules...error is normally mine.
Also, be sure to update online as TT continues to update software...particularly during early part of filing season (January).
Tax software is somewhat "dangerous" if you have any complications as it always prepares a tax return that "looks" fine...but can contain user input errors that will often go undetected.
If you have multiple income sources or other complications I would suggest using a tax preparer...remember...you have no real idea if YOU have prepared a correct return or not...
I use TT online- so I did not buy anything in store. Cost me $19.95 for fed and $40 for state. I did not file my return yet.
I am examining W-2 and similar- here are some differences between 2008 and 2009
2008
More federal tax withheld- $1800 total ($1000 me and $800 for wife)
HSA was considered employee contributions and because of this, I had to manually enter some info into TT, but the HSA schedules printed and my refund increased (less taxable income).
2009
Less Federal tax withheld ($1800 total)
HSA was considered 100% employer contributions ($5900 was listed in box on w-2 as employER contributions, even though $4400 of this was me and $1500 came from employer). Meaning all $4400 I contributed was taxed based on what I know thus far.
**if I removed the HSA from the W-2, then manually input a $4400 HSA contribution in different section of TT, the amount owed went down.
The question of the day:
When you have an HSA and HDHP thru an employer does the IRS treat this differently on the 1040 than if you are retired and have an HSA and HDHP on your own?
anyone?
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Doesn't sound like a good deal to me. I downloaded TT from Amazon and paid about $45 for Fed + State. I have it now on my computer and can run as many different scenarios as I want through out the year. Also my kids do their tax returns with my TT.
TT only gets cheaper as time goes on.
I would be concerned if you are entering the W2's differently then they are from your employer. That is something that the IRS normally matches right away.
If you think the W2's are wrong have your employer provide you corrected ones, especially if you are correct.
Why raise a flag to the IRS. There is plenty of time left to get them corrected.
If you think the W2's are wrong have your employer provide you corrected ones, especially if you are correct.
Why raise a flag to the IRS. There is plenty of time left to get them corrected.
Bestwifeever
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My daughter made 13 mortgage payments in 2007 and 11 in 2008--which made them owe money when they did their taxes last April as less mortgage interest was thus paid and deducted in 2008.
TomCat
Recycles dryer sheets
jIMOh;904486**if I removed the HSA from the W-2 said:Raise the question with your employer and get the W-2 corrected if it is wrong. Employer can file a corrected W-2.
BTW...my gut reaction is you need some help with your tax return preparation. First TT may be wrong...now W-2 may be wrong. My concern is that you may be wrong
OP
OP
jIMOh
Thinks s/he gets paid by the post
Raise the question with your employer and get the W-2 corrected if it is wrong. Employer can file a corrected W-2.
BTW...my gut reaction is you need some help with your tax return preparation. First TT may be wrong...now W-2 may be wrong. My concern is that you may be wrong
I have not filed yet
I needed to see the impact
I know either the W-2 are wrong HSA wise, or I am wrong in taking it off W-2.
what I do know is the HSA is a source of one of my problems.
In 2008 and 2009 the same HSA was shown differently on the W-2.
Here is my guess based on various feedback thus far
1) My HSA was incorrectly done on my 2008 tax return. I asked my employer for a corrected W-2, they sent me one, but it still is not the same as what my 2009 looks like (codes and amounts) regarding the HSA.
2) Because my HSA contributed to a $1800 refund, that number would have been much much lower.
3) Because I do not account for the child tax credit on my W-4 and allowances, that $1800 being lowered to around $900 means I was $1100 in the hole for 2008, setting a false expectation for myself heading into 2009.
4) More than likely the HSA is correct as listed on my W-2 based on what others are telling me based on how payroll, payroll taxes and what the IRS wants (I have to fill in enough to make sure IRS knows I did not over contribute to account, but the tax return will show no HSA tax benefit if money is withheld by employer).
