Filing taxes - I don't get it.

[laurensmomma]

I am so frustrated. I just did our taxes, and between federal and state, the system (turbotax) is saying we owe $5k. How is this possible? 

Our taxable income was just over .... PDQ. We have a mortgage, we have one child, we pay interest on school loans, and we both claim 0 on our W4, which takes the most taxes out throughout the year. How the hell do we owe $5k? Does that sound right? After I had put in my earnings, we were getting back almost $4k. When I entered my husbands, it completely changed.

Everything is pretty straightforward for us, so I hate to pay someone to do our taxes, but will if I'm doing something wrong. 

[laurensmomma]

I know so many people that don't have the deductions we do, claim 2 or more on their W4 and get back 3 to 4k! Of course, I don't know how much they make, which is probably the difference. I'm sick to my stomach.

[kadams767]

Are your incomes substantially similar or quite different? Married zero isn't the right withholding for many couples. I have to withhold a lot extra each check because my husband's income is less than 1/3 of what mine is, so the calculators don't work for us.

[7costanza]

Can you try another system before filing?

[laurensmomma]

Feb 2, 2017 20:18:48 GMT -5 kadams767 said:

Are your incomes substantially similar or quite different? Married zero isn't the right withholding for many couples. I have to withhold a lot extra each check because my husband's income is less than 1/3 of what mine is, so the calculators don't work for us.

For most of last year, I made about $20k more than DHL. Now it's more like $30k. This scares me for the future, and I'm thinking I need to withhold more. Sob.

This is also what confuses me. I had a higher income, and when I put my stuff I  we were getting 4k back. I enter his, and it swings about 9k in the other direction??? I just have to assume I don't understand how all this works.

[laurensmomma]

Feb 2, 2017 20:19:41 GMT -5 7costanza said:

Can you try another system before filing?

I was thinking of trying this. Most likely will before I proceed.

[archiethedragon]

If that is significantly different from last year, and it sounds like it is, start with comparing your draft 1040 this year with your return from last year. See where the differences are and maybe you will find that you just made a data entry error this year.

[tealblue]

Are you both withholding married 0? Like a previous poster said-- that usually doesn't work for dual income households.

One thing that's easy to recommend is one spouse withhold at the single rate and the other at the married rate. I would assume your husband needs to change his to the single withholding rate.

State could be a separate issue and should usually be pretty straighforward. I would make sure your companies are withholding correctly on that one (usually it's just the state rate) plus any county or city/locality taxes too.

[laurensmomma]

archiethedragon, thanks for the rec. I went into panic mode and didn't even think to do that.

[tealblue]

Adding on: I would go to a different software (taxact dot com is what I use) and put it all in there to double check. It doesn't sound like a complicated situation where a CPA is needed. Then have your husband fill out a new W4 at his work and change his withholdings since it's still early in the year.

[laurensmomma]

Feb 2, 2017 20:28:32 GMT -5 tealblue said:

Are you both withholding married 0? Like a previous poster said-- that usually doesn't work for dual income households.

One thing that's easy to recommend is one spouse withhold at the single rate and the other at the married rate. I would assume your husband needs to change his to the single withholding rate.

State could be a separate issue and should usually be pretty straighforward. I would make sure your companies are withholding correctly on that one (usually it's just the state rate) plus any county or city/locality taxes too.

Thanks for responding.  

I didn't know there was a single withholding and a married withholding... doh! 

[thatgirl2478]

did you deduct your property tax AND mortgage interest? did you deduct your state income tax? did you make sure your 401k contributions show up in box 12 (if you're eligible for the retirement contribution credit I believe this needs to be filled in... I could be wrong though)?

But yeah - a lot of times the Married 0 withdrawal doesn't always deduct enough! It's frustrating.

[thatgirl2478]

If you know what credits etc you qualify for, you can run the calculator on Dinkytown (stupid name but they have a ton of great financial calculators) www.dinkytown.net/java/Tax1040.html

[laurensmomma]

thatgirl2478, I know I did both the property taxes and mortgage insurance. My company does a 401A, so I don't put anything in that (they do 12% on my behalf). I put in the amount of contributed to my ROTH last year, but they said it didn't qualify (was only doing it for half the year).

[kadams767]

Feb 2, 2017 20:26:06 GMT -5 laurensmomma said:

Feb 2, 2017 20:18:48 GMT -5 kadams767 said:

Are your incomes substantially similar or quite different? Married zero isn't the right withholding for many couples. I have to withhold a lot extra each check because my husband's income is less than 1/3 of what mine is, so the calculators don't work for us.

For most of last year, I made about $20k more than DHL. Now it's more like $30k. This scares me for the future, and I'm thinking I need to withhold more. Sob.

This is also what confuses me. I had a higher income, and when I put my stuff I  we were getting 4k back. I enter his, and it swings about 9k in the other direction??? I just have to assume I don't understand how all this works.

Your husband's withholdings calculate based on his salary amount, lower salaries have lower amounts automatically withheld.  A $9k swing is a lot though, did he have almost nothing withheld?SaveSaveSaveSave

[miniroller]

You're making me nervous, OP. Last year we were hoping to get a little bit ~$500 back; we owed $2,200. We do, however, own a business, so things are much more complicated. Our accountant was supposed to make an adjustment or two, but I'm just remembering that sinking feeling way too well 😰
I'm SO sorry!! Hope you figure things out!

[laurensmomma]

Feb 2, 2017 20:44:34 GMT -5 kadams767 said:

Feb 2, 2017 20:26:06 GMT -5 laurensmomma said:

For most of last year, I made about $20k more than DHL. Now it's more like $30k. This scares me for the future, and I'm thinking I need to withhold more. Sob.

This is also what confuses me. I had a higher income, and when I put my stuff I  we were getting 4k back. I enter his, and it swings about 9k in the other direction??? I just have to assume I don't understand how all this works.

Your husband's withholdings calculate based on his salary amount, lower salaries have lower amounts automatically withheld.  A $9k swing is a lot though, did he have almost nothing withheld?SaveSaveSaveSave

Not from what I can tell. Proportionately, he had about the same % (maybe a little less, but that sounds accurate since he makes less) taken out. That's why I was shocked when it happened. I wouldn't have expected that big of a swing unless he had absolutely nothing withheld. 

[laurensmomma]

Sorry, miniroller, don't want to make anyone nervous, lol. Misery does love company, though. :0)

[explorer2001]

Any non wage income? Dividends, interest, flow through from investments can really throw off the numbers. You pay tax on that income but never have tax withheld or see it in your bank accounts.

[whiskeytails]

Did you report your health insurance coverage correctly?

[bostonmichelle]

Double check that you entered his salary and withholdings right. And if they are calculate what percentage he withholds versus you. Something doesn't sound right.

[laurensmomma]

Feb 2, 2017 21:10:50 GMT -5 explorer2001 said:

Any non wage income? Dividends, interest, flow through from investments can really throw off the numbers. You pay tax on that income but never have tax withheld or see it in your bank accounts.

So, this is where I have to plead ignorance. So, we have a decent amount of money in three different types of accounts. A 403B, a 401A, and a Roth. I know dividends were earned, but I didn't take any of that money, it just gets reinvested. Do I have to claim those dividends? I didn't receive a tax forms from either Fidelity or Vanguard, which is where those accounts are.

[laurensmomma]

Feb 2, 2017 21:11:07 GMT -5 whiskeytails said:

Did you report your health insurance coverage correctly?

Hmmm. I haven't entered that part yet. Will that make a difference? I had to take the kids to Taekwondo, so didn't get through the rest.....

I just entered and this changed nothing for us. Thanks, though!

[whiskeytails]

Feb 2, 2017 21:21:13 GMT -5 laurensmomma said:

Feb 2, 2017 21:11:07 GMT -5 whiskeytails said:

Did you report your health insurance coverage correctly?

Hmmm. I haven't entered that part yet. Will that make a difference? I had to take the kids to Taekwondo, so didn't get through the rest.....

I just entered and this changed nothing for us. Thanks, though!

This should change it drastically. No insurance and you'll get a huge penalty. Yes insurance, no penalty

[laurensmomma]

Feb 2, 2017 21:29:12 GMT -5 whiskeytails said:

Feb 2, 2017 21:21:13 GMT -5 laurensmomma said:

Hmmm. I haven't entered that part yet. Will that make a difference? I had to take the kids to Taekwondo, so didn't get through the rest.....

I just entered and this changed nothing for us. Thanks, though!

This should change it drastically. No insurance and you'll get a huge penalty. Yes insurance, no penalty

We were both completely covered the whole year through my company. So at least we were good there. 

[laurensmomma]

I'm now wondering if it's just that we're in a higher tax bracket. I'm in the middle of trying a different software program, and this time I entered just his in first, and it says we should be getting almost 4K with just his stuff. This stuff drives me crazy. Hopefully by the time I done, I can say it was all a false alarm, but I'm not holding my breath.

[LoveTrains]

If you are both withholding married 0, it's probably right that you owe. The first thing to do is check to see how much you had withheld (combined - add that from each of your w2s) and check that against what your total tax liability was last year.

I was working on my taxes this week. I put in my info and boom, $5k refund. Then I add in Hs stuff and yup, I owed $4k. Then I put in all my deductions and.now I'm at about a $200 refund but it sounds to me like something similar is happening to you.

When you just put in the one income, it's assuming that is your household income. Then you add yours in, and obviously it changes. Double check to be sure you have all your charitable deductions, child care credits etc.

And make sure you adjust your withholding for next year. I do single 0 and H does married 0 plus withholds an extra $100/check.

[laurensmomma]

Soooo... I used the software tealblue, suggested, and we are just about BREAKING EVEN. Getting a little back from Federal, owe a bit more in state. Only out of pocket like $400.

OMG, thank goodness. Thanks for all the recommendations. Even though I double checked everything in Turbo tax, something was just off. It was also giving me $1k for child deduction, whereas this one only gave me $700. It's crazy how they are so different.

[puppyluv]

You need to look and see what your tax liability was last year compared to this year to see if it correct. It is possible that you guys underwitheld. H and I both withhold at single 1 and get about $1k back. It end up withholding about 13% of our gross each pay check.

Every year, I enter my amount first and it looks like we are getting a ton back, the once I add in H it drops significantly. It is because I tell it married filing jointly first and my salary alone puts us into the second tax bracket with more withheld than necessary. Then once you add your spouse and recalculate so that basically everything they earned is applied at in the higher bracket rate becuase of they way the tax brackets work. Like you only pay the 15% rate after $x amount. So if you got to $x with just your salary then when the tax software adds in H it applies 15% to all his earnings but in reality he only had 13%with held it is going to decrease your refund.

[laurensmomma]

Oh geez, I ran the alerts, and I missed entering our property taxes, and now we get about $800 back total, lol. What a roller coaster.....