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Posted by ericdfields on February 19, 2008, 9:41 pm
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Now that I finally got my W-2 from my previous employer, I plugged it
into Turbo Tax and ta-da!.... $1k+ _subtracted_ from my refund. How
could this happen?
I first thought that I might have bumped into a higher tax bracket.
Based off the numbers from http://www.moneychimp.com/features/tax_brackets.htm,
I was in the 25% bracket before and after my additional W-2 was
added.
The federal income tax, social security, medicare, and state
withholdings were all proportional to what I've always given up.
I'm sorry I can't give the exact numbers we're dealing with here. I'm
not shy about what I earn, but I don't want to put all the numbers in
place here unless I have to. Regardless of this, I'm hoping someone
out there would be able to clue me in as to why this happened. I
haven't filed yet...
Thanks.
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Posted by Phil Marti on February 19, 2008, 10:28 pm
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"ericdfields" wrote:
> Now that I finally got my W-2 from my previous employer, I plugged it
> into Turbo Tax and ta-da!.... $1k+ _subtracted_ from my refund. How
> could this happen?
Easily. It happened because you looked at the amount of your refund before
your return was finished. It's a meaningless number without all the
information. To see what I'm talking about, delete both W-2's from your
return, then input them in reverse order from what you did before. You'll
find that it's "really" your current job that's causing this to happen.
By the time you input that second W-2 your return had already accounted for
all the things that reduce tax--exemptions, deductions, credits--and this
was just pure income. All of those things had been reflected in the amount
withheld while you were working for that employer.
Be happy that you weren't silly enough to give so much money to Uncle Sugar
interest-free throughout the year.
--
Phil Marti
Clarksburg, MD
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<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Tyler Franks on February 20, 2008, 8:32 am
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> Now that I finally got my W-2 from my previous employer, I plugged it
> into Turbo Tax and ta-da!.... $1k+ _subtracted_ from my refund. How
> could this happen?
I explain it to my multi-job clients like this: Each of us gets from the
government an effectively tax free amount of income that is the Standard
deduction and the number of personal exemptions you claim on the W-4. Every
job you have makes two assumptions when withholding tax from your income:
That you will work at the job all year and that it is the only job that you
will have. Therefore the withholding from EACH job is based on you getting
the Standard Deduction and the Personal Exemptions. But since you will only
get those deductions ONE time on the 1040, you effectively underwithhold.
Remember that every dollar of your second and third job is taxed, while only
the dollars after your deductions and exemptions are taxed on your "first"
job.
Please friends I understand that this is an oversimplification, but an
effective one with multi w-2 clients. It leads to a great discussion of the
W-4 form, and I invariably end up printing out an adjustment for their W-4
to "fix" the issue for the next year.
Tyler Franks
EA with ink still wet
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>
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