Hello,
In 2005 my salary was 59,000 and I got a federal refund of about 2,700$ ( I started the job in may). In 2006 my salary was 67,000 yet my federal refund is only
692$. Why is this? I was expecting more than in 2005?!? Same job, same company, didn't adjust how much tax they should withold. The only thing that changed is that I enrolled in a 401k for 2006.This is according to Turbotax, could it be a bug or wrong information on the W-2?
In 2005 you only worked for a portion of the year, yet got the full benefit of the personal exemption(s) and standard deduction for your filing status. Also, because of the short year, your withholding was probably overwithheld - resulting in a larger refund. The real question is WHY are you having so much withheld that you would have $2,700 overwithheld? Sounds kind of stupid to me.
More likely it is because you haven't bothered to figure out the federal tax system, so naturally assume this is a "problem".
The withholding tables assume that your income is steady throughout the year. Thus, in 2005 your withholding was based on an anticipated total income of roughly $88,000. Since the income tax rates are progressive, someone with $88K income pays a higher effective tax rate than someone with $67K (actually less because of your 401(k) contributions). It sounds like you're still having too much withheld. If you're single with only one job and minimal other income, you should be claiming two withholding allowances on your W-4 filed with your employer.
-- Phil Marti Clarksburg, MD
The data we don't have is - what is your net income in both years, after any 401(k) deductions, which for federal taxes, come off the top. And then, how much was withheld? By the way, using tax withholdings as a savings plan should be avoided. The $2700 was money you lent uncle sam at no interest, and no 'thank-you'. You'd have been better off adjusting your withholdings to end the year as close to net-zero as you can. JOE
If you're married and filing a joint return, did both of your two kids turn 17 last year? You would then have lost exactly 2000$. This just goes to show that your limited information doesn't tell us anything, and we can make a lot of assumptions about your true condition. Facts?
ChEAr$, Harlan Lunsford, EA n LA
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