Taxes...

[HollaGeo]

I was talking to a co-worker of mine and the topic of taxes came up. He was telling me that he always ends up owing $10K. My wife and I got back $6K. We make a pretty decent living, well into the mid-$100K range. I know for a fact the guy makes more than I do. I would probably say in the $200K - $220K range. Why would somebody who makes that kind of "bank" have to owe $10K???

 

[veritas honus]

Re: Taxes...

Many different reasons. First, the obvious... He didn't pay enough throughout the year. It's probably quite intentional on his part. If he makes over 200K per year. 10K is not a debilitating amount for him to pay once per year, so why should he give up more of his income throughout the year? He can easily get a refund by paying more throughout the year. I think the best thing to do, since your oviously curious, is ask your co-worker.

 

[ezmobee]

Re: Taxes...

What he said ^^^^ He filled his W4 out differently than you did. Anyway, from what I understand, the gov't doesn't like people to owe that kind of money year after year. They'd rather earn the interest on your money than let you earn it. He will probably be penalized eventually.

 

[bigdee]

Re: Taxes...

I I know for a fact the guy makes more than I do. I would probably say in the $200K - $220K range. Why would somebody who makes that kind of "bank" have to owe $10K???

Simple....the richer you are,the higher the percentage rate your taxed at and that is unfair. I think everyone should pay the same percentage.

 

[Beefer]

Re: Taxes...

A) Claiming more dependents on the W-9 (?) takes less out per paycheck throughout the year, but you may end up owing at tax time
B) You have more tax deductible expenses then he does
C) He may not have any write-offs
D) You may have more kids then him

E) the list goes on

Ask him if you really want to know...

 

[j_martin]

Re: Taxes...

What he said ^^^^ He filled his W4 out differently than you did. Anyway, from what I understand, the gov't doesn't like people to owe that kind of money year after year. They'd rather earn the interest on your money than let you earn it. He will probably be penalized eventually.

When he pays up he pays interest and/or penalties based on when it should have been paid and when it was. They really don't care. They get it eventually anyway.

 

[Philip_G]

Re: Taxes...

he doesn't have enough deductions

 

[dingbat]

Re: Taxes...

I adjust my dependent count to keep most of my money in my pocket, not uncle Sam's. We've never had more than a $2,000 refund.

 

[DaNinja]

Re: Taxes...

You want to see a tax revolt?
I think they should do away with all withholdings and just pay the bill at the end of the year. I think many can tell you what their withholdings are or what their refund or payment was, but they could not tell you what their total tax bill was. I have to write a check for the property taxes on the Texas house and it definitely is an ouchy moment.

 

[jkust]

Re: Taxes...

My though is there are just too many variables in our tax code to really even conjecture. Maybe he didn't max out his 401k, maybe he claimed too many dep's, maybe he has a family trust and collects income.

 

[DaNinja]

Re: Taxes...

We had a great year a few years back. When I looked at the tax return that our CPA did, the taxes were almost identical to the price of a new Ford F-250 King's Ranch Super Duty that I had looked at the day before. It made me physically ill that the government took that much money from us.

Do away with withholdings and let folks see what their tax bill is at the end of the year.

 

[bruceb58]

Re: Taxes...

Why would somebody who makes that kind of "bank" have to owe $10K???

I take it you don't do your own taxes. There are so many reasons that he owed $10K that you couldn't possibly know. Could have sold stock!

As far as penalties, if he withheld at least what he owed the previous year, he won't get penalized for this year, even if he made a lot more.

 

[DaNinja]

Re: Taxes...

I take it you don't do your own taxes. There are so many reasons that he owed $10K that you couldn't possibly know. Could have sold stock!

As far as penalties, if he withheld at least what he owed the previous year, he won't get penalized for this year, even if he made a lot more.

I think I can withhold for ten on a W-4, even if I was single. I just have to claim the correct exemptions when I file taxes and pay what wasn't withheld. If you have the discipline to bank the change, at least the money could be earning interest instead of sitting with the government.

My wife and I have had dueling withholdings since she loves the refund and I love to actually have the take home pay to invest. If we are within a couple hundred bucks either way, I'm happy. (well kinda)

 

[mcgyver210]

Re: Taxes...

I always owe since I am a business owner but what I just never can understand is when people act like they are receiving a gift from the KGB when they get a Refund. They don't seem to realize a refund means you loaned the KGB your hard earned money at 0% interest with a refund being a negative return on your money. On the other side the KGB always charges penalties & interest anytime they can.

 

[DaNinja]

Re: Taxes...

I always owe since I am a business owner but what I just never can understand is when people act like they are receiving a gift from the KGB when they get a Refund. They don't seem to realize a refund means you loaned the KGB your hard earned money at 0% interest with a refund being a negative return on your money. On the other side the KGB always charges penalties & interest anytime they can.

You could adjust your quarterlies, but at least the money is making money for you. I have been unsuccessful at explaining to the wife why it's best that we try to keep the money until it's tax time. She, even though she's the corporate business chick, still views the refund as some kind of gift.:facepalm:

 

[bruceb58]

Re: Taxes...

I think I can withhold for ten on a W-4, even if I was single.

You can have as many exemptions as you want on your W4. There was a time that anything more than 9 required you to file a reason but that is no longer the case.

I always try to owe, of course I am one of the few that actually budgets my tax liabilities through out the year.

 

[jeeperman]

Re: Taxes...

I was talking to a co-worker of mine and the topic of taxes came up. He was telling me that he always ends up owing $10K. My wife and I got back $6K. We make a pretty decent living, well into the mid-$100K range. I know for a fact the guy makes more than I do. I would probably say in the $200K - $220K range. Why would somebody who makes that kind of "bank" have to owe $10K???

Ideally, you should not owe or get a refund.
So the real question is why are you letting the gooberment use your $6k for free?
Especially if you refunds in recent years have been at about that level each year.

 

[jkust]

Re: Taxes...

Do away with withholdings and let folks see what their tax bill is at the end of the year.

I could not agree with this statement any more. People are complacent when they don't realize or pay attention to what they pay in. It's like putting your bills on auto pay. Quarterly taxes by everyone would quickly get people's attention. What really bugs me is the people who pay the high taxes receive and use the least government services. That is just backwards.

 

[avenger79]

Re: Taxes...

I always owe since I am a business owner but what I just never can understand is when people act like they are receiving a gift from the KGB when they get a Refund. They don't seem to realize a refund means you loaned the KGB your hard earned money at 0% interest with a refund being a negative return on your money. On the other side the KGB always charges penalties & interest anytime they can.

not to mention being taxed again on a state refund. love that little snafu.

 

[bruceb58]

Re: Taxes...

not to mention being taxed again on a state refund. love that little snafu.

You get taxed on the state refund but because you wrote off the excess the year before. Amazing how uninformed people are about taxes!