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Anyone else getting slammed with a huge tax payment this year?!
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Anonymous
| I bet you could post this question any given tax year and get the same mix of joys and sorrows. You either plan or don't plan - you either talk to an accountant and figure out how to put away enough (my husband and I claim zero exemptions even though we have two children - so we still keep getting refunds, even though we crossed the 400K threshhold last year) or you don't. You either are able to take advantage of 401(k) pre-tax contributions, HSAs and Dependent Care pre-tax contributions or you're not, and you plan accordingly. Yes, paying taxes sucks, no question, but being without a functioning government sucks even worse. I like that my government (both state and federal) attempts to pay for schools, roads, health care, help the needy, and invest in research and development. I wish my government didn't have to pay over 1 trillion dollars (and I am not pulling that figure out of the air - its from the 2010 budget) next year alone (not over 15-20 years) on military spending, but that's part of our government's job as well, much as I can hope and pray that that job's importance will be diminished significantly over the coming years. |
Anonymous
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I love all the people complaining about owing the government money. There usually is a very good reason for it...you didn't withhold enough. I just had a tough conversation with my nanny who owes the government big time b/c she foolishly put 6 or 7 deductions on her W-4 she gave us. I asked her if she realized what this meant and walked her through how should would likely owe a LOT of $$ to the government come tax time, but she wanted the money upfront. Fine, not my problem, but now she is struggling b/c she owes THOUSANDS which she can't afford. Sigh....
Our HHI is almost $500k, so we pay our fair share in taxes. Quite frankly, I'd rather pay it to a government who is trying to reform health care/create jobs than a government who spent TRILLIONS on a war I never believed in and which did nothing for our national security (other than perhaps weaken it). |
Anonymous
*Stands up a cheers* Agreed a thousand percent. And I am the PP who is a little bummed about owing this year because of the untaxed bonus and childcare deduction phaseout. I have no problem with taxes in general. It is necessary for a functionning government. We are trying to break even every year, but our income isn't really high enough to hire an accountant re:tax liability. |
Anonymous
| You are not getting it-it's getting to a point where it doesn't make sense to work hard because the government just eyes your money as their money-right now you paying about 43 cents out of every dollar for taxes when you include federal and state and....unlike years past, most deductions are phased out if you are in the top bracket so it's like you are paying even more. I am glad I am in the top bracket but I worked hard to get there and I am not interested in paying more. FYI-taxes are most certainly going up to pay for healthcare-I was happy with my healthcare. My only sense of satisfaction as my more moderate Demorcrat friends finally have woken up to the realities of Obama so I am hopeful he will be a one term president and even more hopeful to take back the Congress before he does more damage. |
Anonymous
it's very hard to get it exactly right, especially with 2 income families, but turbotax will try if you want it to. |
Anonymous
I agree. I regret my vote. And I will be changing it next time around. |
Anonymous
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Yes---my husband woke me with the news that we owe 70k in taxes. WTF??? I must have had him repeat it three times....did you say 17k?...him: No- 70k.
I am floored. I know we've paid in the teens-20k in the past...but 70K?! We have 2 kids under 4 and just bought a second home last Fall..but we aren't eligible for any of the tax credits that normal ppl get. The good news (ha- yeah right) is that he thinks it should be closer to $50k and will get back to accountant this week. my DH is self-employed. pays himself a certain amount. We've only paid about 28K so far this year--hence the big lump payment now. |
jsteele
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This is not accurate and if you are paying that amount (which I doubt), you need to find a better accountant. Someone making $300,000 and not able to come up with a single deduction, would pay approximately 25% of their income in federal income tax if filing jointly. DC's top income tax bracket is 8.5%. So, that is roughly 33.5%, but without any federal deductions which anyone in that income bracket would have. The only way to even come close to your figure is to be in the highest federal tax bracket which is 35%, but that is not for "every dollar" but for every dollar after $370000 or so after deductions. I never ceased to be surprised by how many people who complain about taxes don't understand the concept of marginal tax rates. This is not to mention that taxes have not gone up under Obama. To the contrary, they've gone done. |
Anonymous
I think the IRS will be investigating you soon. How the h*ll can you earn over $400k and still get a refund? We haven't gotten a refund since we were 25. |
Anonymous
A refund only indicates that your employer withheld more from your paycheck than you owed. You could get a refund too if you increased the amount of tax withheld from your pay (for example, if you asked for witholding "at the single rate" even if you are married). |
Anonymous
Yeah- but my husband doesn't like to give Uncle Sam free use of our tax money -- money we invest, accrue interest and make better use of ourselves throughout the year. The big payout shocks me each time--but we end up growing personal wealth more this way. Just takes more planning this way. |
Anonymous
As I said - no exemptions from either of our paychecks, 2 children, a heck of a mortgage, and a second home loan, charitable donations and some limited green credits - and yes, we used a certified accountant who's been doing our taxes - he calculated AMT, he did everything he was supposed to do. I do not try to get away with anything on taxes - for one thing, we both work in industries where we need to be very honest and diligent about our claims. |
Anonymous
Absolutely - if I had my druthers, I'd like to get a small refund every year - but for the past five years due to house selling, house buying, births, and charity our income and deductions have been so wacked, that its difficult to figure out the amount that we would owe, so we over pay throughout the year, and get back a couple thousand in March. |
Anonymous
I think I need the name of your accountant.... we haven't been able to find a decent one. |
Anonymous
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What many, particularly younger professionals, don’t realize or don’t want to accept, is that getting that huge refund is really a poor financial strategy.
The reason why anyone would be able to receive a huge refund is mostly going to be due to the fact that they were paying the government too much withholding tax on their income throughout the year in the first place. A lot of people realize this, but don’t seem to want to take action. Personally speaking, I have fallen into that psychological trap as well, where you think by getting a large refund you are somehow better off financially for it. Getting that large check in the mail feels like a huge blessing. Quite the opposite is true. The Drawbacks to getting a Large Refund: 1. You are loaning your money for a negative return.This money could easily be going into your bank account and earning interest throughout the year. Let’s say that you invest the extra income in mutual funds and you earn the stock market historical average, in effect you’re loaning the government your cash and in return for your kind offer you are giving them a good chunk of cash. Even if you just put the money into a high interest checking account that returned 4% a year, consider it a 4% loss on the amount of your refund 2. You are binging and purging your cash. Getting more of your true income delivered to you on a consistent basis allows you to work it into your budget. If you direct deposit this income into your savings, you don’t miss it at all. The urge for many, when they receive a big refund, is to go out and spend it because they feel that they deserve it. They do, after all, it’s their hard earned cash! If you set yourself up to not get that big refund, there’s no urge to purge. 3. You are not able to distribute investment risk evenly over time. Part of any good investment strategy is to distribute risk of loss buy adding investment contributions over time. Even if you wisely invest your refund versus spending it all, you would most likely be making one large contribution versus spreading out risk over the year. This is a bad investment practice. Your End Goal with Withholding Taxes Ideally, at the end of the year, you will benefit the most if you receive a very small refund (close to nothing) or end up paying a very slight amount that you will be able to easily pay |