income taxes

[Liesje]

Is there anyone here who is kind of a whiz with taxes? I don't need help doing them/filing them but I don't understand why the numbers come out the way they do. In short, my husband and I both claim zero exemptions and he chose to have the higher rate withholding (I may have too, I don't remember), plus we pay qualified interest up the wazoo with our student loans and now our mortgage and yet we still end up owing lots of federal taxes each year. I cannot figure out what we're doing wrong or if this is normal for people in our situation to always owe more money? Do I have to specify an additional dollar amount to be withheld in order to NOT owe money every year? I know you can do that but I didn't think that was common. DH's payroll people looked at his W-4 and didn't see anything out of the ordinary. I was joking around about it being because we don't have kids yet but now I'm seriously wondering if that's the difference? I'd be willing to share exact numbers if anyone is curious and could help....

[jocoyn]

I adjust my witholdings based on the year before. You have to be wealthy and live off of investment income to be taxed a lower rate I am afraid. You can specify an extra amount to be witheld each pay period.

I would guess that what is going on is your combined income is kicking you up to a higher tax bracket and witholding is being done as though you are each single taxpayers in a lower tax bracket.

[arycrest]

Do you prepare them two ways ... filing separately and joint? Have you had a tax accountant look over them ... It might pay you to get professional advice since it sounds like you're having enough taken out.

[Liesje]

That makes sense I just don't get why no one else around me has the same issue. People look at me like I'm crazy when I suggest we have to specify a dollar amount for withholding. Must be more common than I thought?

[Liesje]

Originally Posted by arycrest

Do you prepare them two ways ... filing separately and joint? Have you had a tax accountant look over them ... It might pay you to get professional advice since it sounds like you're having enough taken out.

I considered running them separate but then we lose all the qualified interest on student loans, which is several thousand dollars a year. I'm just leery of paying someone even more money to tell me that I'm still screwed.

[kiya]

We get beat over the head every year, no kids, our only good deduction is mortgage intrest. If you can start putting the max in 401k so the taxable income is less.

[Liesje]

I'll run this through turbotax separately and see what happens... I'd be totally happy breaking even (that's ideal!), I'm just sick of having to write a big check!

[Liesje]

Well I'll have to get back to this tonight since my lunch break is up. I've read through the cons of filing separate and the only one that seems to apply is that we can't claim the interest on student loans, but depending on the results we may be better off without it? None of the other things apply to us (no kids/dependents, no lifelong learning credits right now, no IRA right now). If you file separate one year can you go back to joint the next year?

[ladyfreckles]

We use turbotax. I tried to understand filing taxes on my own and I just couldn't.

[I_LOVE_MY_MIKKO]

Originally Posted by Liesje

If you file separate one year can you go back to joint the next year?

This is my first year filing as married, and unfortunately I think I am going to be in the same boat as you are. It seems like it would benefit my DH and I to file seperately this year, so I have looked up whether we can file jointly in the future, and yes you can change your filing status year-to-year.