For the first time my return is saying that I have to pay taxes instead of getting a refund. Right before I left my previous job I got a small raise and I got another one when I switched jobs. I'm thinking that now at the end of the year it looks like I was making all this money (which still isn't that much) and I didn't have enough taxes taken out when in reality since I have been at this new job (since September) I've been paying over a thousand a month in taxes (more than 25 percent of my income). Is there anything I can do to look into this situation? I pay over 500 a month in student loans and after that and taxes I really don't have that much left and I just don't have an additional 3,000 to pay in taxes. I've never underpaid before I honestly feel that this is a mistake.
How many exemptions did you have the company withold at on your W9 since September? Was it the same rate or different than your prior job? Did you income increase? Did your contributions to medical plans and/or 401k decrease in the new job? How does your MAGI differ from last year? THese can all help explain the surprise. Verify your filing status. Verify your student loan deductions. Verify your number of dependents.
Sorry. Insufficient info to definitively answer. It's entirely possible there's an entry or math error in your calculations (depending on whether you're using software or the good old pencil). Suggestion: Either visit a paid preparer, or try either VITA or AARP TaxAide (links are available to find sites at
For starters, fill out a new w-4 (using the worksheet) to ensure that the proper amount is being deducted. It is possible that not enough taxes were being taken out at the first job. The raises shouldn't matter as your withholdings should have adjusted accordingly (%, not fixed dollar withholdings). Of course, if the raises were substantial enough to push you firmly into the next tax bracket it would have an impact, but you indicated the raises were small. Are you not taking deductions that you did in previous years? Are you itemizing or standard? Has your filing status changed? Have you moved? Any changes from year to year will alter your tax scenario. We probably need more info to make a decisive recommendation.
If you don't understand why you owe so much, it's nearly impossible for anyone here to figure it out without any numbers. Are all the numbers you entered on the return correct? For instance, do the amounts in Box 1 of your W2s add up to the amount of wages reported on the return? How about the withholding? If you post your total income, number of dependents and any other deductions/credits you might have, we can estimate how much tax you should have to pay. Dennis
Thanks for all of the replies...I between my jobs my income increased by about 5,000k (from 45000 to 5000). From what I recall, my pay stub from my old job was around 1730 every 2 weeks and I netted 1310. At the new place my pay stub says
2080 but I bring home 1509 after they take out takes and health insurance (which I didn't have to pay at my old job) I didn't have a 401k (there was some ESOP plan at my old job that I wasn't there long enough to qualify for) and my new job doesn't have a 401k. I don't have any property,no husband, no kids, no dependants. The only deductions I have are for student loans and the 100 dollars I paid to register my car. Looking at a copy of my W4 on line 5 it says that I have 3 allowances. They are from line A,B, and E on the worksheet. I have no idea what line E really means...should I not have checked that? Also, I was using Turbotax online to complete my taxes.
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The allowance on Line A is for you. Line B is for your non-working spouse, but you don't have one so you shouldn't have an allowance there. Line E is for filing Head of Household, which you are not, so you shouldn't have an allowance there either. In other words, you should have either 1 allowance (from line A) or none at all (to overwithhold and play it safe) on your W4. As it stands, you claimed three allowances during
2006 (instead of one or none) and therefore were underwithheld by quite a bit. You probably ought to to to your payroll or HR department and get this changed as soon as possible.
There is a possibility that you miscalculated your taxes. However, if your taxable income is a little over $ 60,000 you would owe about $ 12,000 if you are filing single and you would be in a marginal tax bracket of 25% (or higher if your income were much higher). A taxable income of $ 60,000 would mean you earned MORE than $ 60,000 but had deductions and exemptions that reduced it. You might also have tax credits that would cover part of the tax. If you have three allowances on the W-4 that covers you and two dependents. If you are single, then that is two extra dependents which would result in underwithholding.
Based on the information you supplied in response to " snipped-for-privacy@yahoo.com" in your second post below, can I assume that the $1000 a month your describe as taxes your paying in your new job in the preceding paragraph really represents the totals of your income tax withholding, Social Security and Medicare taxes, and health insurance? Here's what I see as a rough estimate of what your taxes should be reasonably close to if I use a few assumptions to fill in missing information. By now you should have W-2 forms with the exact figures for pay and withholding. Compare your W-2 TuboTax output with them. My figures certainly will differ a little from actuals, but not significantly. If yours differ significantly, I think that is the place to look for your error. Pay from First Job (January through August) $29,400.00 Pay from Second Job (September through December) $18,700.00 Total Income (Form 1040 line 22) $48,100.00 Student Loan Payments (Form 1040 Line 33) $6,000.00 AGI (Form 1040 Line 37) (Substract Line 33 from Line 22) $42,100.00
Standard Deduction (Single) (Form 1040 line 40) $5,150.00 Exemption Allowance (Form 1040 Line 42) $3,300.00 Taxible Income (Form 1040 Line 43) $33,650.00 Tax (Form 1040 line 44) $4,964.00
Federal Income Tax Withheld from First Job (January through August) $2,989.83 Federal Income Tax Withheld from First Job (September through December) $2,370.35 Total Withheld (Form 1040 Line 64) $5,360.19 Amount of Refund (Form 1040 Line 74a) $396.18
Looking at the above and recognizing that my figures will vary from your real ones a little: In entering your figures into TuroTax, did you enter the withholding for both of your jobs. It appears that omitting your withholding from the first job might account for the additional $3,000 you say you don't have. I can't see any other thing that would account for your problem even if my assumptions are off a little as to when you changed jobs or how many allowances you claimed in the first job, etc. Unless there is something that you haven't told us, based on what you have told us in your two postings, you should not owe that much, if anything, that I can see. Hopefully, that is the case and you don't really owe that large amount of money. NOTE: Removed very appropriate post by " snipped-for-privacy@yahoo.com" that was here to which the OP responded with needed additional information (See below)
I didn't consider the costs of registering your car anywhere in my calculations since I couldn't figure out its signifcance to your federal income tax situation. It probably got covered in my assumption to use the standard deduction although you may have entered it into TurboTax to help it make the Standard or Itemized deduction decision.
As best I can tell, you probably don't qualify for checking line E. However, that 1 extra allowance alone doesn't account for the problem. Recommend you file a new W-4.
After looking at the other posts that were posted at the same time as my response, I realize that my calculations and analysis were in error. So you should ignore my post even though I still don't see why you should owe $3,000. Unlike mine, you've got some good advice and suggestions from others. My error was in deducting all of your student loan payments rather than just the interest which should be substancely less and therefore shouldn't have any major impact on your taxes or amount owed. Sorry for my misdirection.
NOTE: To avoid confusion I've removed my incorrect calculations and anyalysis that were here and elsewhere in my original response.
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