Tax question

[GrimJack]

My income was significantly higher last year due to extra pays from longer hours (~15% more hours). Therefore, the amount listed in box 1 (wage) is much lower than boxes 2 & 3 on my W2. I did pay taxes on my extra income as the amount per pay check shows the hours worked extra and the pay expected from those extra hours but the total take-home amount is lower than the regular take-home plus the extra pre-taxed salary. Therefore, I know taxes were taken from my extra pays.

My wage is shown to be at the low amount but the amount in boxes 2 & 3 forced to actually owe tax this year. Does that mean the extra pays had pushed me to a much higher tax bracket, to the point that I still owe tax even though I paid taxes on those extra pays. That is pretty messed up as I put in a lot more effort to earn extra and being punished for it.

Additionally, when is taxes actually due if taxpayer owes the government money. This is my first year that I would owe money. I ended up doing a joint return as my spouse had no income and a large tuition fee.

Only earnings that put you into a higher bracket are taxed in that bracket - this is called marginal tax rate. Have you actually run your numbers through any of the tax software available on-line? Have you done a paper return for practice yet? If you haven't then you don't know what your taxes are. Tax returns have to post-marked on April 17 if you owe. Whereas if you are expecting a refund - you have 3 years to claim the refund. Do not borrow money to pay your taxes, currently interest on balance due is 3% per year (compounded daily) + 1/4 % per month (to a max of 25%) failure to pay penalty which is slightly more than 6% per year. Compare that to credit cards and other types of loans.

Nothing I say can or should be taken as advice; I do not speak for the IRS, I just work there.

[nick__45]

Don't think you'll find many people here who think you're crazy for being smart enough to pay less interest. The benefits far outweigh any tax returns.

Regarding your origninal question, I don't think we have enough info to asses whether the tax bill was due to more income. Lots of things can affect whether you get a return or owe -- retirement contributions, charitiable contributions, tax credits you may have previously qualified for and no longer do or ones that have expired, etc. Are you contributing to any savings to lower your taxable income? That may help you have a more favorable outcome for next year.

I am not doing any claim for non-cash charitable giving this year. The reason is that the foundations I gave to turned out to be thrift stores operating under various veteran type of charity. I did give them an equivalent of 2000 dollars, according to Turbo Tax non-cash giving values, in clothes, tools, equipments, etc. However, I have no receipt of such as they do not provide receipts. I just leave the items at the end of my driveway the morning of the pickup dates they gave me and the items are normally gone before 8 a.m.

I'll start a thread asking about this. Thanks.

[riverwed070707]

I used the education credit ($2500 maximum) and will get a refund back. Otherwise, I would owe almost $200. I normally get about 400-600 dollars return and that is roughly how much I want to have on loan to the government. A more savvy tax-filer probably could get more back under the same condition as I but I don't want to complicate things much. I just file a very standard form but do claim my mortgage interest and property tax. Interestingly, the deduction amount between claiming the house fees and a standard 1040EZ is only ~2000 and this is my second year into the mortgage. After my refinance close early next month, I may be back to the 1040EZ.

As D Ramsey stated, hoping to get more money back in tax refund by paying a lot in mortgage interest is foolish. Many people still think I am crazy for refinancing with a 15 years term instead of dragging it out to 30. I just want to pay it off and be free of car and mortgage payments.

Don't think you'll find many people here who think you're crazy for being smart enough to pay less interest. The benefits far outweigh any tax returns.

Regarding your origninal question, I don't think we have enough info to asses whether the tax bill was due to more income. Lots of things can affect whether you get a return or owe -- retirement contributions, charitiable contributions, tax credits you may have previously qualified for and no longer do or ones that have expired, etc. Are you contributing to any savings to lower your taxable income? That may help you have a more favorable outcome for next year.

[nick__45]

Your $$ owed is due April 17th this year.

If your spouse had a large bill for tuition, did you take one of the education credits to offset your taxes?

Box 3 would be higher than box 1 because you have some sort of pretax contributions, such as HSA or 401(k).

I used the education credit ($2500 maximum) and will get a refund back. Otherwise, I would owe almost $200. I normally get about 400-600 dollars return and that is roughly how much I want to have on loan to the government. A more savvy tax-filer probably could get more back under the same condition as I but I don't want to complicate things much. I just file a very standard form but do claim my mortgage interest and property tax. Interestingly, the deduction amount between claiming the house fees and a standard 1040EZ is only ~2000 and this is my second year into the mortgage. After my refinance close early next month, I may be back to the 1040EZ.

As D Ramsey stated, hoping to get more money back in tax refund by paying a lot in mortgage interest is foolish. Many people still think I am crazy for refinancing with a 15 years term instead of dragging it out to 30. I just want to pay it off and be free of car and mortgage payments.

[SnoopyCool]

Your $$ owed is due April 17th this year.

If your spouse had a large bill for tuition, did you take one of the education credits to offset your taxes?

Box 3 would be higher than box 1 because you have some sort of pretax contributions, such as HSA or 401(k).

[nick__45]

My income was significantly higher last year due to extra pays from longer hours (~15% more hours). Therefore, the amount listed in box 1 (wage) is much lower than boxes 2 & 3 on my W2. I did pay taxes on my extra income as the amount per pay check shows the hours worked extra and the pay expected from those extra hours but the total take-home amount is lower than the regular take-home plus the extra pre-taxed salary. Therefore, I know taxes were taken from my extra pays.

My wage is shown to be at the low amount but the amount in boxes 2 & 3 forced to actually owe tax this year. Does that mean the extra pays had pushed me to a much higher tax bracket, to the point that I still owe tax even though I paid taxes on those extra pays. That is pretty messed up as I put in a lot more effort to earn extra and being punished for it.

Additionally, when is taxes actually due if taxpayer owes the government money. This is my first year that I would owe money. I ended up doing a joint return as my spouse had no income and a large tuition fee.