Tax Return Time - Surprise!

[know1]

Not sure if anyone else has done their taxes yet, but I got a not-so-nice surprise when I did mine.

Background - I'm actually someone who does not want a big refund. I view that as the government having my money and not paying me any interest. Therefore, I try to have it set up so that I either break even or owe a little at this time of the year.

Last year, I had it perfect. I owed about $700 to the Feds and got back $600 from the state.

I didn't change any withholdings and my income and deductions were essentially the same as last year.

However - to my surprise - this year I owe $4000 to the Feds and am getting back about the same as I did last year from the state.

I remember seeing some info early in the year that the withholdings from checks had changed somewhat (I think it was part of the stimulus package), but I remember it saying that it would affect it by $1000 or so and I didn't feel that was an issue.

Now this isn't a tragedy for me because my wife and I live well below our means, but I could see this being a real problem for someone who doesn't manage their finances the same way.

Has anyone else seen something like this happen?

[ironhead70]

wow my wife does taxes for a livin she say that everone has gotton back about 1000 more than they did last year...... if u want u can call her and she can double check it for u for free we have had some people pop in from h&r block that was not happy and she has found some mistakes on theirs 502 525 1706



my wife said it does not sound right at all to call her and she will run the numbers and figuar it out for u

[Grumpy]

I don't have time to look it up right now but early in the year (2009) they changed the with-holding amounts AS A MEANS TO PUT MORE SPENDING MONEY IN PEOPLES POCKETS. They lowered the amount taken out, which means that IN MANY CASES, you will owe more at the end of the year. Whether you get a refund or actaully owe depends on your tax status and your actual with-holding. They said at the time that many people that usually get a large refund will get a much smaller one or maybe even owe money. After the change went into effect, I changed mine back and even had a little more taken out and I still owe more than a $1000 (however, part of the incease is because of unreported/paid gambling winnings).

I think a lot of people are going to be surprised.

Gruimpy

[roadrunner]

They did reduce the amount of withholding to put more money in your pocket but they did not lower the taxes so you have to make this up at the end of the year. We notified all our employees and most of them changed their dependents so that their withdrawals were about what they were a year ago those that did not are crying now.

[know1]

Yep - I remember something about changing the withholdings, but I didn't think it would be such a drastic change.

Could it be because I claim 4? I claim that many because that is the number that it took to get us to breaking even.

And the other thing - do I make a change to it now? Is the government going to screw with them again this year and make all my planning for naught again?

[mhall]

Change it now. Claiming four is what got you.

[know1]

Change it now. Claiming four is what got you.

But before this year if I claimed less than 4 I just got a huge refund which just makes me mad.

Like I said, I'd rather pay a little....but $4K is more than a little.

How am I supposed to know whether they will screw with it again this year?

[DJD]

Just gotta react man. I posted that thread last year because we notified our employees and some changed others did not. I did and even had more taken out per month on Federal. I'm always paying Fed even with claiming zero and using my HSA to decrease mt taxable income. I'm scared because anytime taxes are involved I feel someone in my pocket.
The big help for the middle income families is a joke. If your gonna help us why not really help? The politicians just don't get it...Vote ALL the goons out of office!!

[know1]

Just gotta react man. I posted that thread last year because we notified our employees and some changed others did not. I did and even had more taken out per month on Federal. I'm always paying Fed even with claiming zero and using my HSA to decrease mt taxable income. I'm scared because anytime taxes are involved I feel someone in my pocket.
The big help for the middle income families is a joke. If your gonna help us why not really help? The politicians just don't get it...Vote ALL the goons out of office!!

I was notified and made the decision not to change....but after reading the notification, I thought it was just going to change about $1000 or so.

Like I said, I can handle it, but I'll bet there will be an uproar from people who didn't make changes and now owe thousands more than they expected.

[psprowler]

Withhold less so people have more to spend. They spend all that and then now they basically have to pay it back in the form of a tax increase. But they've already spent it. And most probably didn't even know it happened, and now it's too late.

Yep, sounds logical to me.

I'll probably be in your boat know1 but like you and yours we live well below our means as well..........

[mhall]

But before this year if I claimed less than 4 I just got a huge refund which just makes me mad.

Like I said, I'd rather pay a little....but $4K is more than a little.

How am I supposed to know whether they will screw with it again this year?

Michael, maybe consider splitting the middle.

[know1]

Michael, maybe consider splitting the middle.

Yeah - I'm going to have to. The problem is you can't tell what the government will do next so it might swing all the way the other way.

I'll bet there are going to be a lot of people complaining when the realization of all of this hits. I already warned our Accounting department.