Any tax people?

[linz]

I'm trying to do our taxes on turbotax and having an issue. I didn't scroll thru the posts below so sorry if this has been asked but any CPA's I can ask a question to? 

My basic question is H and I combined made about $80k last year, which puts us in the 25% bracket if I read correctly. I claim 1, he claims 0. We don't have kids. Have a house but with mortgage interest and taxes we paid less than standard deduction so won't itemize. I have a little SL interest.  After I entered all that we owe like $1k! WTMF. Can someone explain this to me? I've always claimed 1 and gotten a refund. So are we getting f'd just because we made over $70k?

I thought about doing married filing separately but didn't know how that works. I read that only one can itemize and if one person does the other has to. So if H claims the house stuff, then I won't have anything to claim and then I would owe right, since I won't get the standard deduction?

If we owe, whatever it sucks but I'll deal with it. Just trying to make sure we don't owe a ton. I don't care if we don't get a refund (even though it pisses me off) I'd just like to come as close to breaking even as I can.

[y4m]

Are you a newlywed? If so, welcome to the marriage penalty!

Your employers can't see your spouse's income when they are taking out your taxes, so (assuming you each make $40K), they are charging you in lower brackets individually. Then when you combine your incomes and actually file, the married bracket for $80K is not equal to 2x$40K, and so you end up owing. That's the one sentence version anyway.

This is also important for second jobs. Each employer can only see its own payroll, so if you have a part time, low earning job, they will withhold as though you are making next to nothing, when in fact incrementally, all that income will be taxed in your highest bracket.

[linz]

No we've been married 3 years but H used to be self-employed, so this is the first year where both of us had jobs that tax was withheld. So I'm just f'd? I figured it had to do with us not getting taxed at a higher bracket but jeez. Would you recommend trying MFS or just stay Joint and bend over for the IRS?

[y4m]

Hmmm...how does your effective tax rate this year compare to last year when your DH was self-employed? It should be decently lower because you're no longer paying the employer part of payroll taxes, unless your income together increased.

MFS is very rarely advantageous. Turbotax will tell you if it's better, but you'll probably just be bending over with the rest of us MFJs...

[Deleted]

You can run TurboTax both ways and see what the difference is between MFS and MFJ but except in special circumstances, MFJ is almost always the right answer.

There's a withholding calculator on the IRS website that can help you calculate what should be withheld from each paycheck, and if what is being withheld isn't enough even if you go with 0 allowances, there's a blank space on your W4 where you can fill in an additional amount to be taken out of each paycheck.

[SJ]

As others have said, there are very few circumstances where MFS is advantageous.

You are in good hands with TT- it will let you run it both ways.

[LoveTrains]

You are not really bending over to the IRS. You under-withheld.

What I would recommend doing is taking a look at last years return and seeing what was the total tax owed and your effective tax rate. Then compare that with what turbo tax is telling you this year just to check your work.

You need to adjust your withholdings.

[mrsfarmer]

Is that 80 gross or as Taxable? Deductions come off before percent is applied. Most likely you are both withholding married which probably is not correct.

[londoncalling]

As of this afternoon the withholding calculator is still under "maintenance" at IRS.gov.

Sounds like you are under withheld. Sorry.

[jenjen]

A lot of people make the "mistake" of filling out their W4's both as married. However, like others have said, the payroll tax tables do not know how much your spouse makes. So when withholding taxes, it uses just your income as if it's you and your husband combined make $x. Then your H's company is doing the same. When you combine your income, it may put you in a higher bracket. I think paycheck city has a withholding calculator. Or I believe, you can have an extra $x withheld from each paycheck (or put $x into a savings account each year if you owe $1000).

[Norticprincess]

We have to withhold at the single rate, 0 and in previous years DH had extra money withheld. Currently on medical leave so I just pick a percentage of mine to withhold, on the higher side so he dropped the extra. I never knew exactly what our total would be for the year with his bonuses, sometimes we'd be close owe a small amount and sometimes we'd get a lrefund, adjust the next year's extra to reflect.

[Deleted]

When he was self employed was he not paying taxes?

[LoveTrains]

Jan 24, 2013 17:14:47 GMT -5 linz said:

If we owe, whatever it sucks but I'll deal with it. Just trying to make sure we don't owe a ton. I don't care if we don't get a refund (even though it pisses me off) I'd just like to come as close to breaking even as I can.

Why would it piss you off that you didn't get a refund? The onus is on you to withhold at the proper rate. Just because you aren't getting a refund doesn't mean that you are paying more or less in taxes than those that are getting a refund.