FEDERAL TAXES. Why do I owe big bucks?

Status
Not open for further replies.
A

ARCOgraphite

Joined
May 17, 2009
Messages
20,541
Location
N.H, U.S.A.
Why have been paying over three grand the past few years!
I
I claim -ZERO_ allowances (exemptions M0) and have no extraordinary extra dividend income ( under 2K)

Married filing Jointly, took the 24K STD deduction since I have low mortgage interest.

My Wife works too; we ear n about the same with our combined income in the low 100's, We each put around 10% into tax deferred 401K.

Now IRS wants to penalize me for inadequate withholding. I took NO ALLOWANCES! W4 Claimed M0 on both earners.

Anyone else in the same boat?
 
Last edited:
I think you need to see a tax accountant. It sounds like whatever the cost for the consult is, it will be worth it in any penalties you might pay otherwise.
 
Not in the same situation but you can go M0 + certain flat dollar amount also on the withholding amount for W2.

The rest, you may want to get a good tax accountant.
I said "good", somebody who really knows not HRBlock type.
 
Originally Posted by ARCOgraphite
Anyone else in the same boat?
Yup. We take no allowances and still owe a ton every year because of AMT.

You may need to request extra withholdings on your W2 form to avoid penalties.
 
Thanks. but I have no write downs possible. Its a very simple return. My schedule A workshheet showed I should take the STD Deduction. I dont see any possibilities in the current system for an improvement. I used taxact deluxe online that gives suggestions. Used to be able to throw some $$$ into 401 catch up but the current amended system doesn't allow any income offset at our income level now.

I think the withholding tables are wrong in my situation. Luckily I am now retired - but not collecting SoSec. for 2019 so we should see some help there with no income
smile.gif
 
You need to review and then fill out the IRS 1040-ES worksheet to determine how much more taxes you either need to have withheld or provide quarterly payments to the IRS via the 1040-ES quarterly payment voucher. I have done the quarterly payments for a long time, because my investments provide an erratic source of income.

My Turbotax also does an 1040-ES estimate for me each year, and it has never been wrong, in terms of being too short.

I also have to do the same to cover my state income tax.
 
Quattropete:

I'm about at the exemption phase out lower threshold and well below AMT. I think. Unless they adjusted the table downwards from 2017.
 
I have more than the "claim zero" value held from my pay. Otherwise I owe waaaay to much.
Also, this year the Feds lowered the amount withheld so people's take home would be higher.
Some are getting stung.

Good luck.
 
Originally Posted by ARCOgraphite
Why have been paying over three grand the past few years!
I
I claim -ZERO_ allowances (exemptions M0) and have no extraordinary extra dividend income ( under 2K)

Married filing Jointly, took the 24K STD deduction since I have low mortgage interest.

My Wife works too; we ear n about the same with our combined income in the low 100's, We each put around 10% into tax deferred 401K.

Now IRS wants to penalize me for inadequate withholding. I took NO ALLOWANCES! W4 Claimed M0 on both earners.

Anyone else in the same boat?


I agree you need to see a tax professional, or at least bump up both your withholding amounts. From what you said it sounds like when you combine both your and wife's income you move up to a higher tax bracket that what your withholding bracket is for each of you individually..
 
The brackets have come down a few %.

12% starts at $19K so we are all in there if Married two people working.

22% margin starts at $77K married but $39K single. We don't hit the next bracket which is way up at $165K married

The witholding tables should take all this into account. Plus I claimed zero and the W4 calc said I should take 2! So I witheld the MINIMUM.

I say the IRS messed up BIG TME - as usual, and i'm not paying a penalty for their mistakes. If They send me a bill - I'm ignoring it.

I filled out a request for waiver of penalty in the taxact program and submitted that.

Ruby ridge here I go!
 
Tell me a trick that a professional would apply? I dont see any. I dont mind paying later, but why are the tables messed up? I bet millions of married couples are where I am. I'm mad about the penalty. I did NOTHING WRONG!
 
Originally Posted by ARCOgraphite
Thanks. but I have no write downs possible. Its a very simple return. My schedule A workshheet showed I should take the STD Deduction. I dont see any possibilities in the current system for an improvement. I used taxact deluxe online that gives suggestions. Used to be able to throw some $$$ into 401 catch up but the current amended system doesn't allow any income offset at our income level now.
I think the withholding tables are wrong in my situation. Luckily I am now retired - but not collecting SoSec. for 2019 so we should see some help there with no income
smile.gif


First of all, congrats on retiring!
My wife did taxes (mostly corporate) for many years and is still involved in reviewing individual returns...I'll show her this to see if she has any inputs.
But, I think the IRS is pretty clear about people being responsible for figuring out their estimated taxes and having extra withheld if needed. I doubt you are going to find much sympathy there.
 
Due to the new tax rules a lot of people are going to end up owing money... I heard it on the news many times to go and double-check your withholdings during the 2018 tax year.
 
Originally Posted by ARCOgraphite
Tell me a trick that a professional would apply? I dont see any. I dont mind paying later, but why are the tables messed up? I bet millions of married couples are where I am. I'm mad about the penalty. I did NOTHING WRONG!

Yeah, I don't think there is a trick to it. Some people suggest changing your W4 to "married but withhold at the higher single rate", but that's basically the same as asking the employer to make additional withholdings mentioned previously.

https://www.reddit.com/r/personalfinance/comments/42y120/owe_a_ton_on_taxes_claimed_zero/
 
[align:left][/align]
Originally Posted by Oily_Thing
What happened to the plan where we could do our taxes on the back of a postcard?

That would be nice! We farm and since 1993 have been going the same accountant to do our taxes. Takes her about three hours and about $300.00 is the cost to us and I figure is money well spent besides I wouldn't even have a clue where to start but I'm good at saving receipts etc.
 
Talk to an accountant. Can you add more to your tax deferred accounts? If you are over 55 I believe you can add even more.

A good accountant should be able to work up a plan that puts you in a break even scenario.
 
Status
Not open for further replies.

Similar threads

V
  • Locked
Long Term Capital Gain Tax Rate?
Replies
12
Views
5K
threeputtpar
T
  • Locked
Bush increases taxes?
Replies
6
Views
1K
Scotto
Back
Top