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Tax question: refund vs payment
Old 02-11-2019, 05:52 PM
  #1

Last year DH and I got a very nice refund, to the tune of several thousand dollars. This year we made 21K more as a couple and got hit with a $3600 bill plus a notice popped up that we are getting a penalty! Come to find out, my DH employer took out $20 less withholding THIS year even though he made 10K more this year (he's going to talk to them tomorrow).

I don't necessarily need a big refund but I'd like to at least try to break even. How do I do this? We've never had to pay this much before. Ugh


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Old 02-11-2019, 05:57 PM
  #2

I wish I could help, but I just wanted to say sorry. I really don't understand taxes and they were easiest when I made no money and always got a refund. Good luck!
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Old 02-11-2019, 05:58 PM
  #3

I usually get that notice of a penalty, but have never had to pay one. If circumstances changed from the previous year, as in making a much different amount, losing a deduction, there is usually a form that you sign and no fee.

I haven't done mine this year yet though. Don't know if that is something that has changed. I have extra taken out of my checks, and dh has his set for extra and we still end up paying.
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Old 02-11-2019, 06:05 PM
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When the change in tax codes happened the media (tv and papers) were advising people to go to HR to check their withholding with the new tax tables to make sure things are the way they want them. It was advertised that if you did not, you may get a smaller refund because the ways the new withholding tables were calculated.

Between the tax table change and increase in salary, you may have bumped up in tax brackets while at the same time not withheld enough with the new tables.
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Old 02-11-2019, 06:57 PM
  #5

I read the paper and watch the news every day and neither DH nor I remember seeing this but lo and behold, tonightís news just ran a story tonight saying lots of people are in the same predicament as us!

I know years ago (Iíve been teaching 28 years) I had extra taken out of my check every month but DH thinks I did away with it (I do not remember!)

I guess once our snow days are over Iíll be contacting my payroll lady and setting more deductions up.

I honestly thought we were getting another refund this year and already was planning to spend part of it...not anymore! 😢


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Old 02-11-2019, 09:08 PM
  #6

When they did the tax bill last year, in addition to changing (cutting) the tax rates, they also redid the withholding tables employers use. When they did this, they did it in a way that adversely affected many two income households who previously itemized. You are not the only one with a surprise bill this year.

The good news is that the IRS will waive the penalty.
https://www.usatoday.com/story/news/...es/2595598002/

http://1040taxplusservices.com/2019/...-underpayment/

Now that you know your tax amount from 2018, you can adjust your withholding to be sure that you have enough taken out this year.
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Old 02-12-2019, 02:17 AM
  #7

I am sorry that happened to you! It is just the spouse and I now as our kids are grown. I changed my withholding to married but withhold at the higher single rate, and 0 exemptions. I also have an extra $40 come out of each payroll.. we each put the maximum amount from our paychecks into our retirement accounts for a lower taxable income.

spouse makes almost double what I do and does " married with 0". Our house has been paid off for 5 years so no itemizing for a while. We did have a $4000 capital gains distribution that stayed right in the fund, but we still need to pay taxes on it. In the end we get a $200 refund. No state taxes in New Hampshire.

I also just want to come close to breaking even but not owe money.

Last edited by twinmom95; 02-12-2019 at 11:14 AM..
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Old 02-12-2019, 05:02 AM
  #8

We're empty nesters, and our tax refund situation will be about the same as last year. For many reasons, we make estimated tax payments four times a year. In the past we've always itemized deductions, but won't bother now since the new standard deduction is greater than our previous itemized totals. Our annual joint income is way below $100,000, and for us, the new tax laws benefit us slightly. It appears that those who usually itemize and live in areas with high property and state income taxes are really hit by the new laws.

You mentioned making $21,000 more this year as a couple. Yes, that will do it. About 10 years ago, we had a sudden income boost for that year (I'll omit the details), and had to scramble to have additional money withheld. We ended up writing very large checks to the IRS and our state department of treasury.

It's best to have just the right amount withheld so that you don't end up with a large refund (an interest-free loan to the government) or a large tax bill. That's much easier said than done. I discovered this the hard way about 25 years ago when I decided to adjust my withholding after carefully going through the worksheet. Yes, my paychecks were slightly larger, but there was an unexpected tax bill at the end of the year along with a penalty for having too little withheld.
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Old 02-12-2019, 06:12 AM
  #9

Just had my taxes done yesterday and we are getting a small refund - just a few hundred dollars. I am very happy as we can no longer itemize and have to take the standard deduction. I will be getting quite a large pay increase this year and will be changing my withholding to married - withholding at higher single rate. I will be increasing my 403b contribution as well. The goal is to break even.
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I hear
Old 02-12-2019, 07:24 AM
  #10

you. Last year was the first year that we didn't get a refund. We had to pay, and now we make payments each month.


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