Eh. Isn't this more a commentary on how we all set up our paycheck withholdings? Our total taxes owed seems more meaningful. Not that I know that number off the top of my head.
@9: exactly. Fix your withholding. And @1 is correct -- the amount of your refund or shortfall has nothing whatever to do with how much income tax you pay.
I own my own small business but, in the three years of its existence I have not made very much at it and so have never paid income taxes (after accounting for all of the deductions that I am allowed). I will get back $130 this year.
The thing that hurts me the most (and might end up making me kill my business and getting a 9-5 BS job) is health insurance costs. As such, I support health insurance reform and lament that it does not go nearly far enough.
The worst idea in the world is the Republican idea of a flat tax. That would destroy me and most other small business owners.
PS Did you see that Exxon paid $0 in income tax to the US government this year? What a crock!
I made more this year than I usually do, so I overpaid by a little. I'm getting a pretty big refund thanks to "Obama's small business tax cuts". Those words are straight from my accountant's lips.
This is the first year I've had to pay for my photo income, which was an unexpected delight, but I came through all right. Then again, it helps that my girlfriend does seasonal work for H&R Block...
Agree that those who repeatedly get hundreds or thousands of dollars back each year are completely mishandling their own withholding rates. If someone wants to front the government money that's their business, but when people celebrate their refund as if the government just gave them a grant for being awesome it just makes me shake my head.
For years I was able to predict my tax liability within $100 either direction, which was great. I have gotten larger refunds the past 2 years but nowhere near a thousand dollars.
And remember, if you don't get much or pay much, you still pay more than the rich people in percent of income - sales tax, Medicare, Social Security, property tax (renters pay that too, read Adam Smith's "Wealth of Nations"), etc.
The average rich person pays 8 percent federal income tax.
Period.
Many of them pay absolutely NOTHING. Like Exxon which made record BILLIONS in income and paid ... $0.
9, 10, et al: I believe the economic stimulus had something to do with a larger return. I've adjusted my withholding repeatedly and this is the biggest return I've ever had. The last two years I've had to pay.
@19, if you are getting a refund of $5,450, you are even stupider than I thought, which is stupider than I had thought possible. You really are the stupidest person who has ever lived on this earth, aren't you?
My husband FUBARed his withholding, again (didn't we have this conversation last year?) and we owed another $3500 on top of the ~$32000 already withheld. Good thing that's apparently not worthy of a fine. Still rather it be that way then get $3K back. Free Loans R Not Us.
I'm still not sure I fully get how the Making Work Pay tax credit affects people's returns. Whether or not I stated I got the credit my total seemed unaffected, but a co-worker claims it greatly changed his total.
Getting a couple grand back, mostly thanks to the fact that this is the first year I've been paying mortgage interest all year long and also deducting several energy efficiency improvements to my home. Going to use that money to fix my motorcycle (save gas) & throw some into a Roth.
@9: I got money back because of school, and because I was working a highly paid job, and then went back to school after 3/4 of the year (not working from Oct. to Jan.), so my witholding was correct, but not for my particular situation.
You can take a lot of the sting out of the "gave the government a free loan" thing if you recall you probably would have earned only 0.1% in passbook savings interest on the money, of late.
Given that the goverenment charges you a lot more interest if you underpay than you give up if you overpay, and given not all of us can predict our total tax liability accurate right even to 10% given the nature of the way we make money, you might be better off aimimg a little on the side of getting a small refund, rather than hitting it right on the nose.
I have the maximum amount withheld, and come tax time, I get... to pay a few hundred more dollars. Damnit, not again. The feds must love big California cities and our above average paychecks/lack of deductions (mortgage, children, etc.). I guess we deserve those high speed rail grants after all.
I paid just shy of $500. My legal-in-MA wife got $1000 back. We both have been out of work since August 09 (and made around the same before that), but I've been getting unemployment and didn't have taxes withheld. Oh, and if we could have filed as married filing jointly, we would've gotten another $200+ back.
Normally, I'd agree with you. However, in some cases, at least those with which I regularly deal, people's income can vary significantly from year-to-year, and so I tell them it's a better strategy to have additional federal withholding taken out from W-2 earnings to cover potential taxes that will need to be paid against 1099 or miscellaneous business income, even if it turns out to be more than necessary. Letting the government collect interest on it and then getting it back is considerably better than finding out one owes a big chunk at the end of the year and not being able to pay it (right-brained, creative types not being the best at money management, you see).
@12:
Are you writing the cost of your self-pay health insurance as an expense against your business income? I hope so.
@27:
The MWPTC is basically an adjustment to the amount of federal tax you owe. Every person employed was to have the amount of their federal withholding reduced by a small fraction in their paychecks. The credit that appears on your 1040 is an acknowledgment that this was considered non-taxable income and so the amount is added to the total of the federal withholding tax you've already paid, thus basically increasing the amount of your withholding and correspondingly reducing the amount you might pay, or conversely increasing the amount of your refund if you were receiving one.
This year because of upped withholding, tutition tax credits, making work pay, energy star windows, and variuos intrest credits we get back 2500. last year because one of my daughters moved out and a step up in income we had a 4500 bill. The various credits have been good to us. Paying back the 4500 I borrowed and covering a 100 per week in extra withholding sucked but it is hard for me to cover a big bill in the spring. We earn enough that really pay to have a real accountant do our taxes even though we have no off payroll income.
I'm a fairly successful small business owner, and on top of the ~$50k I paid in ESTIMATED taxes for 2009, I owed another $18k. It always sucks to write that last check.
Wow, I never imagined that people could get all self-righteous and sneery over *tax withholdings*. Now I see how wrong I was.
And, you know, it's only an advantage to have your withholding be correct if you're the kind of person who will invest the savings wisely. Admittedly I don't have any studies to cite, but I'm pretty sure most people just spend the extra on porn and booze instead of socking it into an interest-bearing account. Those of us who let Uncle Sam take a little extra each paycheck get to blow through a big chunk of change once a year, which is more fun. Yay, five thousand bucks, let's all go to Disneyland!
My boss forgot to send $ to the IRS for taxes for half the year and I paid $900. Now I wonder if it did get taken out of our paychecks and he pocketed it (business went under). Everyone worked varied hours so it was hard to keep track... no way to find out, a good reason to keep paystubs.
Made the mistake of doing my taxes on Turbo Tax, then changing "head of household" to "married" just for giggles, only to find that I'm paying 80% more in federal income taxes because the federal government doesn't recognize my California-legal marriage. Fuckers. Now that's worthy of a tea party.
It's "owe" vs "get back". We all "pay". You use "pay" for what we owe at the end of the year, people think that's what we "pay" in income taxes, and that's not correct.
I got back $1600 this year, and it was due to two factors, neither of which were mistakes on my part. $600 of it was due to leaving my job in august, and as such making significantly less than could be estimated based off my income. $1000 of it was an educational credit, for going back to school.
This is a good post that 47 percent figure, plus a lovely chart:
http://voices.washingtonpost.com/ezra-kl…
Hey, give me $100 a paycheck and I'll keep it "safe" for you. I'll give it back to you next February. No interest, of course.
The thing that hurts me the most (and might end up making me kill my business and getting a 9-5 BS job) is health insurance costs. As such, I support health insurance reform and lament that it does not go nearly far enough.
The worst idea in the world is the Republican idea of a flat tax. That would destroy me and most other small business owners.
PS Did you see that Exxon paid $0 in income tax to the US government this year? What a crock!
I overpay. :)
President Obama loves America's Middle Class and is investing in us again.
For years I was able to predict my tax liability within $100 either direction, which was great. I have gotten larger refunds the past 2 years but nowhere near a thousand dollars.
The average rich person pays 8 percent federal income tax.
Period.
Many of them pay absolutely NOTHING. Like Exxon which made record BILLIONS in income and paid ... $0.
I'm still not sure I fully get how the Making Work Pay tax credit affects people's returns. Whether or not I stated I got the credit my total seemed unaffected, but a co-worker claims it greatly changed his total.
And yeah, I got back A LOT.
Given that the goverenment charges you a lot more interest if you underpay than you give up if you overpay, and given not all of us can predict our total tax liability accurate right even to 10% given the nature of the way we make money, you might be better off aimimg a little on the side of getting a small refund, rather than hitting it right on the nose.
Normally, I'd agree with you. However, in some cases, at least those with which I regularly deal, people's income can vary significantly from year-to-year, and so I tell them it's a better strategy to have additional federal withholding taken out from W-2 earnings to cover potential taxes that will need to be paid against 1099 or miscellaneous business income, even if it turns out to be more than necessary. Letting the government collect interest on it and then getting it back is considerably better than finding out one owes a big chunk at the end of the year and not being able to pay it (right-brained, creative types not being the best at money management, you see).
@12:
Are you writing the cost of your self-pay health insurance as an expense against your business income? I hope so.
@27:
The MWPTC is basically an adjustment to the amount of federal tax you owe. Every person employed was to have the amount of their federal withholding reduced by a small fraction in their paychecks. The credit that appears on your 1040 is an acknowledgment that this was considered non-taxable income and so the amount is added to the total of the federal withholding tax you've already paid, thus basically increasing the amount of your withholding and correspondingly reducing the amount you might pay, or conversely increasing the amount of your refund if you were receiving one.
I owed the IRS $2.
Really.
Ever.
And, you know, it's only an advantage to have your withholding be correct if you're the kind of person who will invest the savings wisely. Admittedly I don't have any studies to cite, but I'm pretty sure most people just spend the extra on porn and booze instead of socking it into an interest-bearing account. Those of us who let Uncle Sam take a little extra each paycheck get to blow through a big chunk of change once a year, which is more fun. Yay, five thousand bucks, let's all go to Disneyland!
However, I sent a $26 check to the Treasury a few days ago, which ain't bad.