Tax With-Holding Question

[swanson719]

My federal taxes: $1100
DW's federal taxes: $450
Total taxes: $1550

Yet our return on TurboTax is still projected to be $1,000+/-. How can this be with a gross taxable income between the two of us at $36,400? Take the personal exemptions and standard deduction, our AGI is $17,700. The vast majority of my taxes came out of January 2009 before I changed my with-holdings and my bonus, which was taxed at $620 of $2,000. I paid about $20 a month from February on. Do I change my with-holdings so we both pay absolutely no federal income tax, since my bonus will still be taxed at the $620? I mean, by that logic, we would still have a $70 return based on identical numbers even though we would pay absolutely no income tax aside from my bonus. I didn't file it yet, because it just doesn't make sense.

What am I missing here? Would they refund excess soc. sec. or medicare payments or something? I pay over $200 a month combined for those.

[creditcardfree]

First, no you can not get a refund of social security and medicare.

It could be the making work pay credit on your return. You each qualify for $400.

Could you clarify your question? Are you stating the amounts that have been withheld are $1100 and $450. Are you also stating that Turbo Tax is projecting a refund of $1000?

[creditcardfree]

I was going to give some other ideas, but I guess I need you to clarify, before I make the issue more confusing!!

[jIM_Ohio]

Check tax credits, earned income tax credit in particular, which is designed to give low income people a tax credit for part of the SS paid.

[wnlbutterfly]

Yes, I am a little confused also on the question.

Jim, I am not 100% sure about the Earned Income Credit being designed to give low income people a tax credit for part of the SS paid, maybe originally, but just based on what I see that people are getting back on EIC leaves me to think that original intention has been forgotten. I would think if that was the reason then it would at least cap at what they paid in SS for the year. I'll have to research that and pay more attention to the EIC vs the SS paid. I find that very interesting (not saying you are wrong, just not seeing that in real life application).

[cicy33]

Keep in mind I am not a tax expert but as I do payroll and have for about 10 years I will try to see if I can help at all. Your AGI is only 17,700. This means that you are only taxed on that amount. Not your actual gross income. while you were earning the money you were taxed on your gross income. This is why you are getting a refund. as stated above you prob qualified for the making work pay credit. actually I am surprised you are not getting more back. I am assuming there are no children or the refund would be even higher. I know that some people say do something to get less back but for me I would rather get a refund and not have to owe at the end of the year. It is a personal choice. I know the government gets an interest free loan but maybe that is a good thing considering our current country money status!!!