Tax question...

[Mare]

Hello All,

I just recently finished our taxes (We use turbo tax) and we are going to end up owing almost $2700. We only have a few deductions and credits since we don't own a home and really have no assets (We are starting over financially from a chapter 13). Anyway we know we have to change my husbands withholding but my question is if we raise his % to his 401k would that also help with next years filing? We'd rather up the 401k then lower the withholdings too much. Am I making sense?

Any thoughts are appreciated

~Maryellen

[disneysteve]

Yes, contributing more to his 401k will decrease your taxable income. If you can comfortably afford to do so, that is a good way to reduce your tax burden.

[SnoopyCool]

This tax calculator may be of help:

Tax Calculators & Free Tax Tips - Income Tax Calculator & Estimators - H&R Block®

[Hector]

Yes it will help.

Here is an example:
If you are in 25% federal tax bracket and live in a state with no state income tax, 25% is your total tax bracket. Now lets say you contribute $5,000 more to your 401k, total tax you pay will be reduced by $1,200(25% of $5,000 = $1,200)

[humandraydel]

Hello All,

I just recently finished our taxes (We use turbo tax) and we are going to end up owing almost $2700. We only have a few deductions and credits since we don't own a home and really have no assets (We are starting over financially from a chapter 13). Anyway we know we have to change my husbands withholding but my question is if we raise his % to his 401k would that also help with next years filing? We'd rather up the 401k then lower the withholdings too much. Am I making sense?

Any thoughts are appreciated

~Maryellen

Actually I don't think it will help. Yes, if you increase your 401k contribution you will owe less taxes, but companies already factor that into the equation when they withhold your taxes. You should really change your W-4 to have more taken out each month.