Anyone else getting slammed with a huge tax payment this year?!

[Anonymous]

Anonymous wrote: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.

I'm sorry that this sounds like a huge amount to you, but it is because your husband isn't playing by the rules. My husband's taxes are not "withheld" due to his job position, so he sets aside the estimated tax amount each month and makes quarterly payments like everybody else. If your husband owes $70k in taxes it is probably because he made - what $300k last year? You aren't getting my sympathy.

[Anonymous]

Anonymous wrote: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.

This just isn't true as a blanket statement. Please, tell me where to find a "high yield checking account" that pays 4% interest right now-- there aren't any. Most people would be lucky to get 1% on savings account interest, and less after paying taxes. Also, mutual funds are not an appropriate short-term investment-- as I think everyone should know by now, they go up *and* down. By all means invest in the stock market, but don't tell me that you are guaranteed a certain rate of return over any 12 month period.

Second, getting a refund can be a perfectly fine way of saving small amounts every paycheck into a larger sum. Of course people are different, and it matters how much we are talking about and what people will do with a large refund vs. what they will do with an extra few dollars in their account every week (you assume everyone will save the weekly money but spend the refund, but I know lots of people who will do the reverse). It makes no sense to declare that getting a refund always a poor financial strategy (I could just as easily assume that people who save and invest a few dollars every week will pay a commission, which would make that approach the dumb one).

What matters is what works for you.

[Anonymous]

Have not read all of the post but the H and R Block program figures the tax credit for making work pay. Make sure you file that form if you qualify. I have always used Turbo Tax until this but H and R program was better for me . I also had an energy credit for new A/C.

[Anonymous]

We're in your boat, OP. Have gotten $3-4k back in the past several years, and this year owe $3k. No major changes, but our income increased just enough to put us in AMT territory. Crap.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

I'm sorry that this sounds like a huge amount to you, but it is because your husband isn't playing by the rules. My husband's taxes are not "withheld" due to his job position, so he sets aside the estimated tax amount each month and makes quarterly payments like everybody else. If your husband owes $70k in taxes it is probably because he made - what $300k last year? You aren't getting my sympathy.

that must include a penalty too. You are required to pay something like 90% of your actual taxes or 110% of your prior year taxes through quarterly payments or withholdings to avoid penalties. So he's clearly paying himself too much if you've only paid about 30% of your taxes.

[Anonymous]

Yup. 10K.

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

I'm sorry that this sounds like a huge amount to you, but it is because your husband isn't playing by the rules. My husband's taxes are not "withheld" due to his job position, so he sets aside the estimated tax amount each month and makes quarterly payments like everybody else. If your husband owes $70k in taxes it is probably because he made - what $300k last year? You aren't getting my sympathy.

This is the first year we are getting any money back in many years. Our income went down since I started working part time for myself; HHI is about 60K. I made estimated payments last year and it appears I estimated too much. We're due for around 2K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote: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.

I'm sorry that this sounds like a huge amount to you, but it is because your husband isn't playing by the rules. My husband's taxes are not "withheld" due to his job position, so he sets aside the estimated tax amount each month and makes quarterly payments like everybody else. If your husband owes $70k in taxes it is probably because he made - what $300k last year? You aren't getting my sympathy.[/quote

no. He pays himself $100k... We made $490k. He does pay quarterly taxes. he's a private consultant. We have an accountant ghat handles his business and our personal.

that must include a penalty too. You are required to pay something like 90% of your actual taxes or 110% of your prior year taxes through quarterly payments or withholdings to avoid penalties. So he's clearly paying himself too much if you've only paid about 30% of your taxes.

[Anonymous]

Anonymous wrote:Nope -received a nice healthy refund, in part due to the tax credits for "green" renovations.

How does that work and how much credit ?

[Anonymous]

If you get socked with the AMT, then you generally are not able to deduct things like the mortgage deduction, local taxes etc. So really, the AMT "takes away" those items and then takes away more of your earned money.

I think we should move to a flat tax, simply exempting the first 40 or 50 k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Nope -received a nice healthy refund, in part due to the tax credits for "green" renovations.

How does that work and how much credit ?

If you installed energystar windows, appliances, etc, you get a certain amount as a credit. I don't know specifics - but you can google it.

[Anonymous]

Got taxes back from preparer tonight. Am still in shock - got socked with the AMT, plus my husband is self employed so we get hit with the self-employment tax. Owe federal government an additional 3k, though DC owes us 4 so it will even out. Thought we would get a large refund - had a child that we did not withhold for, tons of mortgage interest - but no. Under the weight of the mortgage on our two bedroom, student loans, childcare and this unbelievable tax burden we are drowning. Plan to leave DC for a smaller Southern city as soon as we can.

[Anonymous]

Anonymous wrote:If you get socked with the AMT, then you generally are not able to deduct things like the mortgage deduction, local taxes etc. So really, the AMT "takes away" those items and then takes away more of your earned money.

I think we should move to a flat tax, simply exempting the first 40 or 50 k.

I don't understand your comment. We got hit with AMT. That doesn't mean we didn't deduct home mortgage interest.

[Anonymous]

Who can explain the AMT to me? Please dumb it down so I understand it.

[jsteele]

Anonymous wrote:Who can explain the AMT to me? Please dumb it down so I understand it.

AMT is supposed to ensure that everyone pays a minimum amount of tax. It was designed decades ago to catch people who used loopholes to escape their fair share of taxes. However, AMT is not indexed to inflation. As a result, many people for whom AMT was never intended now fall into AMT territory.

I used to think that AMT was an either/or proposition. Meaning that either you paid regular income tax or AMT. Now I realize that you first figure your regular taxes and then, if they aren't high enough, AMT gets tacked on.