Tax refund estimate

[Bob B.]

I've estimated my federal and state income tax refund.

Federal withheld = $2,854
State of Michigan withheld = $1,746
Estimated federal tax = $2,687
Estimated state tax = $1,548
Estimated SS tax on wife's freelance income = $484
Child tax credit + retirement savings contribution credit = $4,796
Estimated federal refund = $2,370
Estimated state refund = $199
Total estimated refund = $2,569

What will I do with the money? Pay bills.

[littleroc02us]

Why do you get refunds?

[Bob B.]

Originally Posted by littleroc02us

Why do you get refunds?

Difference between fed withheld and tax due BEFORE credits = $167

The refund is due to child and retirement savings tax credits not over withholding.

Please correct me if I'm wrong.

Federal withheld = $2,854
Estimated federal tax = $2,687
Child tax credit + retirement savings contribution credit = $4,796

[Hector]

What bills do you need to pay?
debt, emergency, ret.....?
more information is needed

[disneysteve]

Originally Posted by Bob B.

The refund is due to child and retirement savings tax credits not over withholding.

You could still adjust your withholding so that you don't get such a large refund.

[Bob B.]

Originally Posted by disneysteve

You could still adjust your withholding so that you don't get such a large refund.

Thank you

[JoshuaHeckathorn]

Originally Posted by disneysteve

You could still adjust your withholding so that you don't get such a large refund.

Yea- I agree with DS. Get the cash in your bank account now so you don't have to wait around for Uncle Sam to cut you a check back. And if you haven't fully funded your EF or maxed out retirement contributions, then do that first.

[littleroc02us]

Thanks guys, that's where I was planning on going with my post, but ya beat me to it.

[Bob B.]

So...how many allowances should (can) I claim?

There's me, DW, two children, and a foster child we hope to adopt. By the end of the year, we'll have had the foster child for 9 full months, so we will claim him as an exemption.

DW doesn't work.

I currently claim 4 allowances. I hadn't thought to log on to the HR website to change my allowances after we began caring for the foster child.

Seems like I looked into this in the past, and increasing allowances made only a minor difference in the amount withheld, like to the tune of $50-$100 at the end of the year. Not a big gain if there's any risk in claiming too many allowances.

[Slug]

You need to use IRS calculator, because there are penalties associated with claiming too much. It's a very strange calculation in my opinion. I can't wait for the promised overhaul of the tax code.

[jpg7n16]

Here's the link to IRS withholdings calculator - straight to the IRS.gov site:

2010 Withholding Calculator