Tax Frustration

[thrillme]

SIGH...I'm so frustrated with taxes. I guess I just need to "vent" a bit. Last year as an widowed single mom I was able to claim a bigger deduction than this year so naturally we got more back last year than this year. I'm HAPPILY re-married but grrr :mad:...finances haven't changed in just a few months (if you're married for one day you're married for the whole year).

Now this article from CNN Money:
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Joint filers whose spouses work. Each spouse will end up being paid the credit for married couples by each of their employers.

There's a twist, too. Because of the way the withholding tables were set up, each working spouse may be paid up to $600 this year -- instead of up to the $800, Mezistrano said.

In other words, the husband would receive $600 at his job and the wife $600 at her job, for a total of $1,200. Since they're only entitled to $800 total as a couple, that means they would have to pay $400 back to the IRS -- or see their refund reduced by that amount.

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Why on earth do I want money NOW that I have to pay back later. If I want a "loan" I'll go to the bank. (and really now...to the "average" middle class is $33 more a month REALLY going to make a HUGE difference)

Yes...I'll have to make EXTRA adjustments so that I don't have to pay anything next year to compensate. I've always managed to never have to pay...I'm just "frustrated" that's all. I just hate the thought of being socked with a big tax bill at the end of the year.

[diz_girl]

Think of the extra money that you have to return as an interest-free loan from the government to you, because that is what it is. Getting a tax refund is basically giving the government an interest-free loan and for married couples this stimulus is actually the reverse.

I'm also part of a dual-income couple and yes, the marriage penalty isn't fun. The first year you feel it, but you then adjust your withholding to accommodate the change, and you don't notice it in subsequent years.

As for this tax credit, I think that it's main purpose is to stimulate the economy. In this current economy, if people get a windfall all at once (like last year's stimulus check), they'll either save it or pay down debt, which defeats the purpose of the stimulus. I used mine for 10-day non-expiring park hopper tickets. Two years ago, most people would have spent the windfall before they actually received it. However, when this stimulus is split up into smaller increments, like an extra $15 a paycheck, many more people will spend it, stimulating the economy in the process.

[vicster]

I've had to withhold additional money for my federal taxes. We already have to pay every year and I don't want to pay more next year. Dual income families definitely need to be aware that you're both getting this tax credit which will affect your refund/payment for next year.

[thrillme]

I really wish there was a way to tell them that I don't WANT it. I'd rather just claim the amount next year and get a refund.

I'm thinking about trying to find out EXACTLY how much I'm going to be getting then have that amount either pushed back into taxes or put into an automatic deposit back into a savings account. I will not be taken down easily. GRR. What I REALLY loved about the CNN article was that this deal will give money to people who don't make enough to pay any tax at all :confused: How do you get a tax refund when you don't pay anything to start with?

I guess I'm just overall frustrated with the whole situation. I had NOTHING broken (other than the fact that I'm not a millionaire like I want to be) I really don't want the government to FIX it.

I feel like I'm turning into one of those Seagulls from Finding Nemo...Mine, Mine, Mine!

[vicster]

I really wish there was a way to tell them that I don't WANT it. I'd rather just claim the amount next year and get a refund.

The average tax credit is $15.00 per week which you should be seeing on your paycheck beginning March 1st. I changed my federal tax withholding to an additional $15.00 per paycheck so I don't have to pay as much next year. All you have to do is change your withholding on your W-4.

[thrillme]

All you have to do is change your withholding on your W-4.

That is EXACTLY my game plan. So far my paycheck hasn't change at all. So I figure it's going to kick in around April.

I'm feeling sorry for some people whom I think are going to be socked in the gut by this rebate. A married couple where one of the pair has a second job could be liable for up to $800 they will need to pay in taxes for 2009. It's a little scarey thinking about what's going to happen should some people end up "blindsided".

[vicster]

I'm feeling sorry for some people whom I think are going to be socked in the gut by this rebate. A married couple where one of the pair has a second job could be liable for up to $800 they will need to pay in taxes for 2009. It's a little scarey thinking about what's going to happen should some people end up "blindsided".

It's not necessarily a couple whereby one has a second job - it's a couple where they're both working. Both of them will be getting the tax credit on their paychecks which is where the problem comes in. Many people will not be withholding enough federal income taxes.

[thrillme]

It's not necessarily a couple whereby one has a second job - it's a couple where they're both working. Both of them will be getting the tax credit on their paychecks which is where the problem comes in. Many people will not be withholding enough federal income taxes.

I hear you. I've always been careful of this but I have a number of friends that are treating this like a "gift from above" and I can't seem to get through to them that since "they" always end up OWING that they're likely to OWE even MORE on this years taxes. That they are ONLY getting a loan for anything above a certian amount...I guess the only way they'll learn is when it hits them in the gut around January.

[Georgesgirl1]

Thanks for this info. We always seem to end up owing every year no matter what we do to our W-4. I would rather owe and have that money sitting in a money market or savings account earning a little interest than to give the government an interest free loan on my money all year long!

[thrillme]

....I would rather owe and have that money sitting in a money market or savings account earning a little interest than to give the government an interest free loan on my money all year long!

That is a FABULOUS idea as long as you are DEDICATED to investing it. If you estimate correctly enough to put the money away...You can make a little (depends on how much you're able to save...unfortunately for me it's normally not a whole lot).

The problem I know a LOT of people have is that they end up spending that little extra instead of saving it...thus...they're left scrambling.

I'm trying to look into an automatic transfer each paycheck so that I'm not tempted to touch it. I have very low willpower especially when I'm DYING for a new washer and dryer.

[PAYROLL PRINCESS]

The average is between $10-20 per week. So if you get paid bi-weekly it's $20-40 depending on what you claim. For example I claim single, zero so my bi-weekly amount went up about $20 more in take home dollars. However I also work a second job so I'm getting the tax break there as well. So I would be one of those people who will be double dipping so to speak. That means I need to adjust my W4 to have extra dollars withheld so that I don't end up having to pay more next year (or get less of a refund).

So if you are a married couple, and both are working and one or both of you have a second job, you could end up getting anywhere from 2 to 4 times too MUCH!

I think it was handled better when they did it in one lump sum. Yeah, people may have paid their bills instead of spending it but they are going to be in trouble next year at this rate.

So my suggestion is that if you normally have to pay Federal taxes every year, adjust your W4 now to make sure you don't have to pay even more next year.

[vicster]

So my suggestion is that if you normally have to pay Federal taxes every year, adjust your W4 now to make sure you don't have to pay even more next year.

Already done that! We have to pay and I don't want any surprises next year!

[Georgesgirl1]

Another tax frustration---taxing jury duty "income." My husband was called for jury duty last year when I was 6 months pregnant. He missed several days of work and we were out at least $1000 in income, if not more. That was tough considering we were needing to buy a crib, changing table, stroller, car seat, etc. They paid him $25 a day (less than minimum wage), and now I go to fill out our taxes and they are going to tax that $25 a day!!!! SO frustrating!

[thrillme]

So my suggestion is that if you normally have to pay Federal taxes every year, adjust your W4 now to make sure you don't have to pay even more next year.

I TOTALLY agree...I went in found out the change was $20.50. That's what I'm going to take out. I just wish they wouldn't bother at all. I liked the "lump sum" better...alas...I am going to war...I will NOT "borrow for a burger today to have to pay tomorrow".


Another tax frustration---taxing jury duty "income." My husband was called for jury duty last year when I was 6 months pregnant. He missed several days of work and we were out at least $1000 in income, if not more. That was tough considering we were needing to buy a crib, changing table, stroller, car seat, etc. They paid him $25 a day (less than minimum wage), and now I go to fill out our taxes and they are going to tax that $25 a day!!!! SO frustrating!

WOW...$25...you guys are "rolling in the dough. I got $6 (and I used $8 for lunch in the cafeteria). I find it ludicrious that they actually "tax" that considering MOST people end up "losing" income during that time frame.

[Ian]

Don't even get me started on tax frustration ... I am so aggravated with this whole thing right now I'm ready to spit nails.

I got laid off from my job last year and, as part of my separation, they paid me a generous severance package. When they paid it out, they taxed the snot out of it (similar to the way bonuses are taxed) and took something like 40% of it.

At the same time, the 401k I had with my company had an outstanding loan on it that had to be repaid with plan funds before I could port it anywhere else.

While I was out of work, I collected unemployment that was taxed at 10% and I was fortunate enough to go back to work after being out for two months.

So I kind of knew that my income for last year was going to look grossly inflated, but I figured the fact that they taxed me like crazy on my severance package would outweigh the added taxes I would owe. I mean it's sort of logical, right, that if they taxed my extra income at a much higher rate than it needed to be taxed (even with my being in a higher tax bracket) that I should still get a refund.

Uh uh ... what ended up happening is our household income appeared to soar for 2008 while our deductions were basically the same as they were in 2007. That, combined with the tax penalty on the 401k distribution, resulted in us getting WHAMMED with what amounted to like a $7,000 swing. We typically get about $3,000 back and instead we ended up owing $4,000!

Everyone else and their Grandmother is getting a bailout and somehow, because I was a victim of the economy and lost my job, I ended up funding them!!