WTF (Income Tax question for US folks)

[CancelMyService]

So I got my W2 today, and I did one of those online calculator things to see how much of a refund I'm going to get. I got married in December of 2006, so I updated my W4 at work to reflect married status with no dependents (which is true, no kids yet, just the wife and I). So I plug the numbers in off the form and it shows I'm OWING OVER $700! :eek:


I'm totally dumbfounded on how this can be. I've only not got a refund twice in my life as a single guy, and both times were around $100. How can I end u owing this much? Did I have incorrect info on my W4?


This is just fucked up news. While I wasn't hanging my financial freedom on a refund, I was counting on it to pay some nagging bills. Now I have to juggle things to pay for a tax bill instead since I don't have an extra $700 laying around.


So what did I do wrong? If you're married with no kids, you're just to have a "1" on the W4 for yourself, right?

[Pedersen]

Welcome to the "Marriage Tax".

Basically, here's how it works: As a single person, you get a standard deductible. For arguments sake, let's say that number is $7000.

When you're married, the federal government treats you as one person. This means that you and your wife each get half the deductible, so $3500 each.

Now, unless you and your wife are making the exact same amount of money, one of you will have a higher income which will (likely) push you both into a higher tax bracket, but without the offset of the deductible to help you out.

Now, add in that the federal government expects all married people to have children, and the deduction for them, and that's why your W-4 would show you were supposed to have 1 (or more) deductibles. No kids? Oh, the withholdings won't be high enough then.

It sucks. The only reason I didn't get bit the first year with me was because I always put down 0 for my deductibles on my W-4. Even with that, it hurt since my wife at the time put down 1, which screwed us over.

[CancelMyService]

So what should I do to avoid getting hammered next year? I didn't want to lie on my W4 and claim dependents I don't have, but if it can avoid getting another fat ass tax bill next year I will.


*edit* re-reading your post, I should just have my and her W4 as 0 for dependents until we have kids?

[ThePhoneGoddess]

So what should I do to avoid getting hammered next year? I didn't want to lie on my W4 and claim dependents I don't have, but if it can avoid getting another fat ass tax bill next year I will.

You're thinking of it backwards. The more dependents you claim the less they hold out. They are assuming that as a married couple, you will most likely have dependents to claim, so they don't need to withhold very much.

Yes, you and your wife should both claim 0. They will take out more of each paycheck, making it less likely that you will owe money by the end of the year.

[sportsmom]

I you're worried about getting hit again, you should be able to go back and request that the IRS take an additional sum out every pay period also. If you had them pull out $5 extra each week, that would help to make sure your taxes were paid and you might get a refund.

[hawkchick11]

I did one of those calculator things too, and it showed i was getting back $400 when I'm actually getting back over $3100.

[strawbabies]

Do not follow the directions on the W4. Always just put zero, unless you have kids.

[PuckishOne]

Welcome to the "Marriage Tax".

Basically, here's how it works: As a single person, you get a standard deductible. For arguments sake, let's say that number is $7000.

When you're married, the federal government treats you as one person. This means that you and your wife each get half the deductible, so $3500 each.

Sorry - not true. On form 1040, the left-hand column of page two lists the standard deductions, as follows:


Single or married filing separately: $5350
Married filing jointly, or qualifying widow(er): $10700
Head of household: $7850


You can see that, either by filing jointly or separately, the total standard deduction for a married couple will be $10,700. When you are married you are still considered two people, even by the federal government. :)

Linky: http://www.irs.gov/pub/irs-pdf/f1040.pdf?portlet=3

[Geek King]

Filing seperately is usually to your advantage, but shell out some cash to a professional this year to make sure. And yes, you should both claim zero dependants if you really want a refund, or else do some calculation ahead of time to see what will get you close to neutral tax liability (you owe nothing extra, government owes you nothing).

[gbm85]

I'd recommend going to www.turbotax.com and using their free edition to file.

When I started my security job last year, I put down a 1 for head of household, because the text was ambiguous. I was paying more than half of the household costs, but since I had no dependents I didn't actually qualify for that status.

So after entering my W2 information, TurboTax told me that I *owed* the IRS $87. But, after going through the deductions, I qualified for the Lifetime Learning credit because I had paid about $1,100 out of pocket for tuition (required a 1098-T from my school). So, in the end I had a refund of $141. Not much, but a lot better than owing money.

There may be deductions you qualify for and don't know about, and since it's free, you have nothing to lose.

[Pedersen]

Sorry - not true. On form 1040, the left-hand column of page two lists the standard deductions, as follows:

That's changed then. I'm glad to be wrong about it. I remember that it used to be true (for instance, I know it was for my 1998 tax year, paying in 1999).

Still, as I said, I'm glad to be wrong now. It sucked, big time, when it was true (that year, I was getting a refund of $1200, wife had to pay $600).