may owe taxes this year (rant)

[KellyHabersham]

*to give some minor background info on this - one of my uncles (who's an accountant) does my income taxes for me......if he wasn't bad about waiting until the last minute, this might not've been an issue*

Anyhow, my rant for the day is that it looks like I may owe taxes this year, reason being that the church apparently took little to nothing from my paychecks for state or federal income taxes. So right now it looks like I'll be owing around $100.....not a huge amount, but still more than I'm really willing to give over to the I.R.S.

And as if this weren't frustrating enough, I apparently gave my uncle my library job W-4 form from 2008, so after I get off work here in the church office, I've got less than an hour to run home and try to find the 2009 form. Unless I get lucky, there is no way I'll be able to find it in that small amount of time, and then I'm stuck at the library job for six hours........and I'm fairly certain I didn't leave it in my locker or mail slot there. And I won't have time to search for it after that job, because I have bell choir practice right after I get off work at the library, so I have to rush to that.

(sorry if I sound whiney here......my mom called me about it not long ago, so I've had a few hours to sit and worry when I can't do anything about it)

[AnaKhouri]

So we had the same problem, my bookstore job took nearly nothing from my paychecks. Turns out this is some weird economic stimulus crap where they didn't take out taxes in hopes you wouldn't notice (like I didn't) and spend the extra money. You can file this form called Schedule M to rectify the situation. But the IRS didn't really tell anyone about it, for obvious reasons, so we found out from Husband's co-worker. It saved us from paying any extra federal taxes.

[trailerparkmedic]

I don't know about any stimulus thing (got back my normal amount from school expenses this year, otherwise would have broken about even) but if you're working two jobs, you need to have extra money withheld. I think this is because each job thinks you're only making your annual salary there and deduct taxes according to that instead of your true annual income, but I'm sure taxguykarl will correct me if I'm wrong.

[KellyHabersham]

Well, the "owing taxes" part was because my uncle just had my 2009 W-4 church form, but fortunately I was able to look up my last paycheck in December on the city's personnel site, so I did have info to pass on regarding my library income. 'Tis without saying that I'll still need to either find (or request another copy of) my W-4 from the library job, but as of this writing, it's not for certain that I will owe/have to pay taxes.

Mostly what's bothering me about this right now is that my uncle had mentioned last year that there might be a problem with the church not withholding enough taxes, but he never gave specifics on what he felt I should have our bookkeeper change. (I should probably mention that it's the state and federal withholdings which seem to be the issue all other deductions are as normal)

[taxguykarl]

If you do, in fact, owe; pay it off ASAP as the interest for installments is about what you could expect to pay for a credit card. You can electronically file for an extension.

If you are getting a refund; you may not need to file an extension as the IRS is quite forgiving if they owe you money.

[KellyHabersham]

Unfortunately, right now it's look like I'll be owing this year, and the amount could be anywhere from $200-$400 (which is money that I do NOT have right now, unless I take it out of savings)......my uncle is doing everything he can to keep the amount I'd have to pay as low as possible.

[Andara Bledin]

I think this is because each job thinks you're only making your annual salary there and deduct taxes according to that instead of your true annual income, but I'm sure taxguykarl will correct me if I'm wrong.

How much is withheld is decided by the employee when they fill out their W-4 with the company.

Most people don't make enough to worry about penalties for paying too much in withholding, but the idea of the W-4 is to try to get as close to being owed/owing $0 as possible.

^-.-^

[KellyHabersham]

*An update of sorts....'tis positive! *

I've since found out that it was the federal income withholding which was the problem, but fortunately my uncle was able to locate a tax credit which eliminated my owing anything. However, I won't be getting a refund........the most I can expect this year is a little something from state income taxes. (and even that, I'm not sure of)

I also sent an e-mail to the church's bookkeeper to explain the situation, and she had a few suggestions which will (hopefully) eliminate this problem before next year's taxes are due.......I'll just have to fill out a new W-4 form.

[Der Cute]

Good on you. Glad you are closer to 0 than I O U $400.

Remember this: a large ($1k ?) fed tax refund means you're actually loaning the government money over the year. If you have your paperwork looked @ by a professional, you may be able to adjust withholdings to equal Refund $100 or IOU $100. The closer to 0 you get, the better you are - because that money NOT being withheld is then available to you throughout the year.

Visit your W4 forms every 6 months, and use the calculator on irs.gov (thanks Karl) and see if you need less or more withholdings.

Cutenoob

[taxguykarl]

but if you're working two jobs, you need to have extra money withheld. I think this is because each job thinks you're only making your annual salary there and deduct taxes according to that instead of your true annual income, but I'm sure taxguykarl will correct me if I'm wrong.

Hypertechnically, you are correct there. The IRS withholding tables are based on the income from that organization. If you work for more than one organization or have a self-employment, you need to either adjust your W-4 to reflect this reality or file a quarterly Estimated Tax return (with payment, needless to say). When I see clients in this boat, I typically prepare what we refer to as the 'empty nester W-4' (i.e. zero exemptions withholding as single) as they are typically the first ones who find out the hard way about under withholding.
Side note: Don't forget to adjust you state withholding as well--if you end up owing them more than say high double-digits. Some states do have penalties for under-withholding.

How much is withheld is decided by the employee when they fill out their W-4 with the company.

Most people don't make enough to worry about penalties for paying too much in withholding, but the idea of the W-4 is to try to get as close to being owed/owing $0 as possible.

Correct here. Not everyone has the discipline to save as they earn. As far as taxes goes, I consider it best to get a client refund of about $1000--that way I can have my fee withheld from that .

Seriously, if you end up owing more than $1000, the IRS assigns a penalty. Moreover, there is a myth that those who owe are best off waiting 'til the last minute to file. Technically by Ides of April, you have to either pay or have an IRS-approved installment plan for payment. If you submit a plan and the IRS balks (typically b/c they won't get paid in a reasonable amout of time) you have effectively not filed!. If this happens on 4/15, a late-filing penalty will be assessed. To avoid this (assume I found myself in that boat), I would file on April Fool's to be sure that my installment plan would get approved (yes/no answers typically take 24 hours) and not waste time on filing a new W-4.

[BlaqueKatt]

trust me you're not the only one-we owe over $1500-don't have it and "HR cube" wouldn't let us file without having the money to pay in full-state or federal(and state refund would almost cover federal taxes)-we get the penalty for owing and for filing late-thanks government

to put the "stimulus plan" into perspective-both my job and my husband's job withheld a whopping 5% for federal taxes-and our withholding forms both say withhold at single rate and withhold an additional $50 per check-my checks the additional $50 was all that was held out

[Andara Bledin]

If the HR Cube place is what I think it is, I'd suggest going elsewhere. Both my mother and aunt worked for them (mother was a checker, aunt was a trainer), and the horror stories they have about how unethical and apathetic so many of the preparers there are and how little corporate cares about it are quite eye-opening.

Otherwise, everybody needs to check their paychecks to ensure that the place they're working for is pulling the proper amount of withholding. Sometimes it's operator error that causes the wrong amount to be withheld, and sometimes it's bad programming in the payroll system. I know that with the payroll service my company uses, if you make a certain type of change, it will remove any other withholding rules already in place for that employee. That sort of thing is easy to miss due to the way the program was designed.

^-.-^

[Rosakala]

I can tell you that the IRS has been automatically adding the Making Work Pay Credit (which is on the Schedule M) if you qualified for it and didn't take it. Been amusing hearing calls from people "I got more money. Is this right??" It's nice to hear people being honest over it.

Also given where I do work, I highly reccomend against using the HR Cube. I have heard some of the most bizarre stories from people calling who filed using them. I took a call where a lady told me that they told her husband he had to divorce her so they could file seperately. * facepalm *

And taxguykarl I apologize for correcting you, but you don't have to have a payment plan, you just have to file. There are two types of fees you can be hit with. Failure to File and Failure to Pay. The failure to file only come into play if you owed the IRS and you did not file by your due date. The failure to pay is attached whether you are on a payment plan or not. But it is reduced by being on a payment plan. It also possible for the penalty to be waived if you have extenuating circumstances but I don't work that section of accounts. You get interest no matter what.

[protege]

Turns out this is some weird economic stimulus crap where they didn't take out taxes in hopes you wouldn't notice (like I didn't) and spend the extra money.

That's exactly what happened. From what I understand, that changed within the past year--employers were allowed to withhold less taxes. Meaning, I got my nice refund cut in half. Bastards. But, at least they're done--I do my own taxes

[taxguykarl]

And taxguykarl I apologize for correcting you, but you don't have to have a payment plan, you just have to file. There are two types of fees you can be hit with. Failure to File and Failure to Pay. The failure to file only come into play if you owed the IRS and you did not file by your due date. The failure to pay is attached whether you are on a payment plan or not. But it is reduced by being on a payment plan. It also possible for the penalty to be waived if you have extenuating circumstances but I don't work that section of accounts. You get interest no matter what.

Technically correct.
The bottom line boils down to: Pay or get on a plan ASAP to avoid paying more than necessary. Don't wait 'til 4/15 to submit your installment plan. I have yet to see or hear of one declined, but there is always the first time.

As for HR Cube (our arch rival) One of their offices in our neck of the woods had an identity theft. incident.

I notice a few things seriously awry:
1) The IRS's legal filing notes that the ex-preparer had a prior criminal record No background check!?

2) Their software allowed a first-year preparer access to the database of clients Inconceivable! At my org, we (nationwide chain with partnership sounding name) only TM's have that kind of access; moreover, I am prompted for my u/n & pw at several stages in the return process.

3) The theft happened during peak activity--how did she have the time to pull this off? Was no one watching the rookie?