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Tax questions

 
 
littlek
 
Reply Sun 11 Apr, 2010 04:57 pm
Looking for free advice!

I keep owing the federal governemt money at tax time. This year it's over 500 bucks. Is it just that the numbers will always work out this way and I can't tinker? Or is there some tinkering I need to do? I'm at one exemption - should I go down to zero?
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jespah
 
  2  
Reply Sun 11 Apr, 2010 05:02 pm
I believe you can jigger the W2 so as to ask it to withhold more (say, a specific amount).

But owing is actually not a bad thing, as you've had use of your money over the course of the year. Big refunds are not a good thing -- they just mean that you've been giving the government and interest-free loan for the past year.
littlek
 
  1  
Reply Sun 11 Apr, 2010 05:05 pm
@jespah,
It's not a bad thing if you can afford to pay it. I can, but I keep putting off the 800 dollar car repair and if I don't fix that soon, I may destroy the engine. I should have asked for the payment plan. I wonder if it's too late.....
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JPB
 
  2  
Reply Sun 11 Apr, 2010 05:12 pm
@littlek,
To give you some examples...

Let's assume you get paid bi-weekly. The federal withholding for one exemption and zero exemptions for various salaries are:

Bi-weekly pay (1 exemption) [zero exemptions]
1000 (87) [108]
1200 (114) [136]
1500 (162) [196]
1800 (230) [266]
2100 (305) [351]

If you're looking to withhold an extra $500/year you're looking for about $20 from each of 26 paycheck (again assuming biweekly pay periods). You can claim 1 single plus $20 or drop down to zero single and probably get a bit back when you file next year.
littlek
 
  1  
Reply Sun 11 Apr, 2010 05:16 pm
@JPB,
Thanks JPB. Does the list go below 1000 bi-weekly?
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JPB
 
  2  
Reply Sun 11 Apr, 2010 05:36 pm
@JPB,
sure

900 (72) [93]
800 (57) [78]
700 (42) [63]
600 (27) [48]
500 (14) [33]

As you can see, the difference is about $20 per pay period which should bring you just about on target for an extra $500/year
littlek
 
  1  
Reply Sun 11 Apr, 2010 07:01 pm
@JPB,
Thanks again!

I think I'll call payroll and go down to zero deductions. I can live without 20 per pay period easier than having to scrounge up 500 every April.
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