I think I do reasonably well with my own finances... until now... I
just did turbo tax for 2009 taxes.
In 2008 I received a $1800 refund
In 2009 it shows me owning $2600+.
That is a $4400 swing in taxes... can anyone tell me if the stimulus
plans could account for such a big swing in taxes from one year to the
next? I changed no withholdings, no deductions and received one
additional credit in 2009. I was not expecting such a big change in
I realize this is not a tax group, but I do know some of you out there
have some tax knowledge. My goal every year is to get the child tax
credit back (without the credit, we would owe about $300 each year).
Something happened which is making me question this logic now.
I's guess a keypunching error in either the 2008 or 2009 return . Print
out each year's form and lay them side by side and look for the
A common item is the sale of an annuity or a capital gain which
suddenly makes parts of Social Security taxable.
I have double checked numbers (went thru return 3 times)
the only difference found thus far is my taxes paid in 2009 was $4000
I am still working, not collecting annuities, only schedule on returm
is schedule A for mortgage interest and property taxes.
jIM - the tax rates haven't changed much (I mean the cutoff from one
bracket to next). Unless your income has changed to the higher, you
shouldn't have seen that kind of swing. You should compare your taxes
line by line. Tough to guess at this.
On Sat, 13 Feb 2010 17:02:23 -0600, jIM
Without seeing the returns side by side, it's impossible to say.
One thing you might consider involves the Stimulus tax changes in
mid-year 2009. Remember that it involved an automatic reduction in
withholding but had income limits on who could qualify. If you
exceeded those limits by year-end you would not qualify for the
stimulus and have to repay the taxes.
It was the stimulus which caused the problem
I am reading this document now
pretty what this amounted to was a marriage penalty and me using
allowances to withhold taxes instead of fixed amounts.
I claimed 14 allowances from my paycheck to withhold less in taxes
(been that way since 2005). This was to offset $45,000 in mortgage
interest and property taxes on schedule A.
I should have done w-4 differently (or so I have been told) so feel
free to turn this into a "how to fill out a w-4" lecture. Thx for
This may be straying, but how do you afford to pay 42% in mortgage
interest (which does not including principal) on 105k gross income?
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I wish I could tell you from what you've posted what caused your problem,
but I can't - not enough details. With the disclosure that I make most of
my income as a tax pro, I can tell you this:
1 - every year the IRS tweaks the withholding tables in an attempt to issue
less in refunds overall. It sucks, but think about how you feel now knowing
you owe money you hadn't planned for. This is what happens to the
government every year when millions of dollars in refunds are sent to
taxpayers. I am NOT defending the government, just stating a fact;
2 - if you worked multiple jobs, or if you and your spouse both worked, that
will contribute to such a swing. When there are multiple employers involved
they do NOT consider what the other is doing. So if you tell two employers
that you are married with 14 exemptions then you're excluding TWO married
couples and 28 exemptions worth of income from withholding;
I see these two things hitting my clients all the time. For the ones who
like to get huge refunds (10K or more) it isn't too bad, they just get
smaller refunds. But or the ones who try to get close to ZERO - no refund
no balance due - they usually get slammed.
I am NOT admonishing you, but this is one of those areas where tax planning
can help, whether you do it yourself or use a pro like me. You should check
your income and withholding at least twice during the year to see if you're
on track - I like to do it in July (after we've got six months of
information to work with) and again in November (while we still have time
left to either make an estimated payment OR handle any shortfall through
Sorry for your pain - but do NOT expect it to get better. I expect it will
get worse - when the tax rates increase I don't expect to see a
corresponding increase in the withholding table rates AND I expect to see
more people hit with AMT and phase outs.
Gene E. Utterback, EA, RFC, ABA
Which is why one should take a look at their first couple pay stubs in
January to see if Fed withholding has changed. Just when I thought I had
things in balance to owe a tiny bit in April, that table shift combined
with lower interest expense on my Sch A, put us back to owing. This
needs to be a yearly tweak.
Gene- this is the type of response I was looking for- between yours
and Joe's, it appears I need to check more mid year and in November to
see if I was "close" when planning for a zero refund.
Thank you very much for taking some time to answer this- I thought it
was as simple as set it and forget it, but that does not appear to be
a solution in this case.
When our good friend, Ron Popiel is put in charge of the tax system we may
have a "set it and forget" tax, but not with the current rules!
Any number of things can cause the kinds of problems you encountered. How
many here remember back when Congress made a RETROACTIVE tax change AFTER
tax season had ended? This caused tens of thousands of taxpayers to have to
pay additional taxes AFTER they had already filed! And Congress's answer to
the uproar - we'll let you pay the additional money over 4 years. Oh Boy,
what a deal!
Paying taxes is like a driving a car - MOST of the time we do it without
paying much attention to what's happening around us, sort of like being on
autopilot - but you still have to be alert to the unexpected.
Glad we could help,
Gene E. Utterback, EA, RFC, ABA