Anyone ending up owing a lot more on taxes than expected this year?

[cags]

Last year I set up our W-4's so that I would break pretty even this year.

I didn't even think to change them when they started taking less from our checks. I figured it was a credit I would get anyway and still be pretty even.

Didn't happen that way.

Apparently they took 300 less from husbands check and 800 less from mine (Which seems excessive).

I now owe them 1300 dollars instead of being close to even. I paid in 1100 less than last year.

I was getting excited with all the stories of great returns this year. Bummer.

[Seedersandleechers]

1. same thing happened to me also,

I always break even and now I'm having to pay over $440 for federal. Don't know why that is but I increased my 403B to 20 percent of my income. Hope that works.

[demosincebirth]

36. Things like that, I ask a tax consultant

[dalaigh lllama]

2. Seems to me "I paid in 1100 less than last year"

means you paid less this year -- or am I not reading that correctly?

[cags]

7. Last year from our paychecks we paid in 8800, this year we only paid in 7700.

[cags]

8. So my bill this year would have been only 200 bucks instead of 1300, if they hadn't taken less.

[sandnsea]

3. Did you take your Making Work Pay?

That would be $800 that would help. I suppose if you don't have any kids or do any energy improvements on your home, you might not have many additional tax credits to help out.

[cags]

9. Ha, I've got all those plus some more. Turbo tax is saying the $800 credit was given on our paycheck

[sandnsea]

13. Maybe you make too much for it

"The Making Work Pay credit starts to be reduced for individual filers making $75,000 in modified adjusted gross income, or $150,000 for joint filers. The credit is reduced by 2% of the amount of income in excess of the $75,000 (or $150,000) threshold. The credit is completely phased out for individuals making $95,000 or more, or $190,000 for joint filers."

[cags]

16. Nope

[sandnsea]

17. You are supposed to file the Schedule M

The Making Work Pay tax credit will need to be claimed on the 2009 and 2010 tax returns to ensure that the amount of the credit is properly calculated. This is true even though tax withholding is being adjusted now to reflect this new tax credit. The IRS explains it this way, “Though all eligible taxpayers will need to claim the credit when they file their 2009 income tax return next year, the benefit will generally be spread out over the paychecks they receive beginning this spring and continue until the end of the year.”

http://taxcreditsact.com/money-saving/making-work-pay-tax-credit/

[cags]

18. Did that, then the software said it did not change my amount because it was taken out already.

[sandnsea]

19. I would do it manually then

Because you should be getting that credit. Ask Frenchie about it maybe too. Or maybe you lost some eic when you lost your dependent too. That's always a shocker.

[cags]

22. I am thinking there is a screw up somewhere and hoping its not with my employers withholding.

[FrenchieCat]

25. that Schedule M - Make Work Pay......

It appears that mostly everyone gets it who had earned income as there was no real credit that occurred technically during the year....simply that the tax tables were lowered, and therefore people paid less in and ended up with a bigger check. That may account for what happened to you. However, you are able to take this credit, as long as you don't go over the threshold MAGI.

Here is more information on how it works.....

How much is the credit?

The maximum allowable credit is $400 for working individuals and up to $800 for married taxpayers filing joint returns. The credit is figured at a rate of 6.2% of earned income. It will phase out for individual taxpayers with modified adjusted gross income over $75,000 or $150,000 for married couples filing jointly; the phase out is at 2%, which means taxpayers who earn more than those limits will still qualify for the credit but will not receive the full amount.

Since I already had money taken out of my paycheck, does that mean I can't claim the credit?

No. If you were paid a wage or salary by an employer, you saw a little more in your paycheck over the year because of the adjusted withholding tables. This means less money was withheld from your check. You did not actually receive any credit during the year.

A credit is a dollar-for-dollar reduction in your tax bill. When you calculate your tentative tax due, credits are applied to that tentative tax and reduce your overall tax bill. You can think of credits as an additional "payment" toward your tax due. So, in this case, a $400 Making Work Pay credit will reduce your tax bill by $400.

It's not a windfall, however. The purpose of the credit is to offset the reduced federal withholding you paid in over the year with the adjusted tables. If you qualify for the full Making Work Pay credit (and most taxpayers should qualify), you should end up with no difference at the end of the tax year. The tax rates did not change -- you just paid in less.
http://www.walletpop.com/blog/2010/02/19/are-you-eligible-for-the-making-work-pay-tax-credit/


and here's more to reiterate and clarify:

BANKRATE'S 2010 TAX GUIDE

TAXES

Claiming the Making Work Pay credit
By Kay Bell • Bankrate.com

TAX TIP No. 12

Most workers saw a bit more in their paychecks from April to December last year. The few extra dollars each pay period was courtesy of the Making Work Pay tax credit, which came to $400 per eligible individual or $800 if you're married and file a joint return.

Now that filing season has arrived, credit recipients will have to account for that money by filing a new form, Schedule M.

The IRS wants this new document if you file a long Form 1040 or the slightly shorter 1040A. Nonresident taxpayers who send in Form 1040NR also will use this new schedule. Folks who can use the shortest return, 1040EZ, will simply use a work sheet on the back of that form.

Schedule M also addresses the $250 sent last year to folks who receive various retirement benefits.

Why the extra work?

The goal of all this extra work is to reconcile the confusion taxpayers and employers encountered when the new credit and revised withholding tables went into effect last April.

Although most eligible workers effectively got the credit amount because Uncle Sam took less money from their paychecks, that's not the official credit claim. The IRS still wants every filer to fill out the new Schedule M.

Once you complete Schedule M, you'll transfer the dollar figure you come up with on line 14 of that document to either line 63 of Form 1040, line 40 of Form 1040A or line 60 of Form 1040NR. Form 1040EZ filers will take their work sheet calculation and enter it on the EZ's line 8.

All these lines on the various tax returns are in the section that records all your tax payments. This includes withholding amounts from your W-2s, certain 1099s and any estimated tax payments you made.

Essentially, at filing time the credit is treated as additional withholding that can increase your refund or reduce any tax you might owe.

Who might be affected?

Schedule M could benefit, or cost, some filers depending upon their personal tax circumstances.

If your employer didn't start using the new tables soon enough (or at all) and you had too much withheld, Schedule M will sort that out and make sure you get your full $400 credit for 2009.

Similarly, if your boss did reduce your withholding, but you're not eligible for the credit, that too will be taken into account on the new schedule.

This could happen if you can be claimed as a dependent on another taxpayer's return.

You also might have had too little collected under the revised payroll Making Work Pay tables if you and your spouse both work, each had your withholding reduced by $400, but your combined modified adjusted income, or MAGI, makes you ineligible for the credit.

The Making Work Pay amount is reduced for joint filers whose MAGI is between $150,000 and $190,000. Other taxpayers whose MAGI is more than $75,000 but less than $95,000 also won't get the full credit amount. If your adjusted income is greater than the maximum for your filing status, then you won't get any of the credit.

And self-employed folks who have no payroll withholding taken out of their earnings will be able to claim the credit on Schedule M if they didn't adjust their quarterly estimated tax payments to reflect the tax break.

Retirees, too

Schedule M also applies to the $250 payment to certain retirees that was authorized by the American Recovery and Reinvestment Act, otherwise known as the stimulus package, signed into law last February.
These checks went to persons who get any kind of Social Security benefit including retirement, survivors and disability benefits; Railroad Retirement payments; Veterans Administration, or VA, disability pensions; and most people who receive Supplemental Security Income, or SSI.

If in addition to the retiree check, you (or your spouse if you file jointly) worked and you paid less in withholding thanks to the Making Work Pay credit, you'll need to file Schedule M. That form will account for these two tax benefits, since your credit amount will be reduced by your $250 retiree payment.
http://www.bankrate.com/finance/taxes/claiming-the-making-work-pay-credit-1.aspx

[OhioBlue]

38. what????

Turbo Tax says the $800 was given on your paycheck?

It most likely was...BUT!! You still get to claim the credit on your tax return. That is what makes up for the lowered withholding. I used an online software too - I think TaxAct - and it figured the making work pay tax credit just fine. Something is seriously wrong if they aren't letting you claim the credit. You need to do a manual return.

[JuniperLea]

4. Sounds like you made a mistake in estimating...

I let mine ride from the year before and I received a much larger Federal return this year. Naturally that was all but eaten up by my CA increase... thanks, Arnold! Jeez.

[cags]

15. Actually I had readjusted to take more because I knew I would be losing a dependant this year.

[elfin]

5. Less here. eom

[KT2000]

6. Making Work Pay saved the day!

Be sure to check out form M - Making Work Pay.
I owed less.

[Davis_X_Machina]

14. I had a child tax credit...

...expire, and the Making Work Pay credit brought things back to basically a wash.

[Moosepoop]

24. Yep, same here. n/t

[tularetom]

10. I don't even want to say how much I owe this year but it's my own damn fault

For anybody who takes distributions from an IRA, you will remember that you weren't required to do so in 2009 because of the recession. So I didn't. What I ignored was that I used those distributions to make quarterly payments to the IRS. So at the end of the year, no withholding, no payments and a big ass tax liability. I have to pay a penalty for not withholding or paying any tax during the 2009 tax year. I was anticipating a ration of shit from Mrs. T but she realizes if we had made the payments we'd already be out the money that we now have to pay.

[Lerkfish]

11. yes, but its because I got laid off, cashed in my 401k and no withholding was made

for state from the 401K (which I didn't understand or they didn't tell me)

[HughMoran]

12. Yeah

...but mine was due to a contract job that I paid a little under on estimated taxes.

[iangmac]

20. CA Tax Rates Increased

If you work in CA, the state tax rates increased during the middle of the year. So if you adjusted your withholding in early 2009, you would have needed to adjust it again after the tax changes.

[cags]

21. Texas, no state tax

[Booster]

23. I owe almost $5,000. So much for that 95% tax cut.

[FrenchieCat]

27. Are you self employed or a contract worker?

Because taxes did not increase, and they indeed went down.....

So what happened differently to you in 2009 from 2008?

[Booster]

43. I'm retired and living on a fixed income & am far from wealthy.

[JuniperLea]

33. That's a tax cut to 95% of the people...

Not a 95% tax cut.

[Booster]

42. Yes, I knew that. I just figured I fell within the 95% of the people

getting a cut since I'm far from rich and am retired on a fixed income. If I don't fall within the 95% range then who the Hell does?

[Autumn]

26. We got less back this year,

about half of what we got last year.

[FrenchieCat]

28. Then something changed specific to you,

because again, taxes didn't not increase....
even if you made over $250,000.

[Autumn]

32. Don't know what it was, almost the same deductions

we took last year, our property tax actually dropped about 100 dollars. Other than the fact that I used H&R Block, I can't think of anything different.

[FrenchieCat]

35. Well of course, without numbers, I can't make an analysis.....

That Schedule "M" credit is meant for use by those who make under a certain threshold, to offset the lower amount taken as withholding each pay period....to ensure that most taxpayers would not have to pay additional when filing their returns.

But having prepared taxes of all kinds over the past 25 years, I can only guess that you must have earned (you and your hubby combined) above the threshold of the "M" credit limitation....
but that the lowered tax tables would have reduced your withholdings taken out of your check each payday since spring....and that is why your refund was reduced.

[damonm]

29. Nope. hefty refunds.

[DevonRex]

30. No. We paid much less than usual. nt

[Peacetrain]

31. Got an extra 1,000 that saved the day.. be sure to check schedule M..

[bigwillq]

34. No

I actually got more back than I was expecting.

[Lindsey]

37. I got a lot more back than I ever expected. I was able to claim

things I've never been able to claim before.

[bigwillq]

39. Cool.

Good for you! Enjoy! :toast:

[proteus_lives]

40. I owed. It sucked.

It was because of all the freelance contractor work I do. I think I fixed the problem but it didn't help for this year. Sigh....

[Jennicut]

41. We got back a big amount, same as the last five years.

We have two dependents and I don't work as I stay home with my two little ones. Of course, the big amount always goes fast, to pay off credit cards and other bills but we are happy to get it back.

[KathieG]

44. We owed 1,100 this year. Last year we received a refund of 800...

I think it had something to do with my husband getting a second job last year.

[cags]

45. I just read an article about it affecting 2 job households. With too much credit being given.

I think thats what happened to us. 1100 less was withheld than last year. Thats way more than the credit should have allowed.

[Jeff In Milwaukee]

48. Here's the deal....

The Making Work Pay Credit was $400 per a person and $800 for a couple.

If you're married, they shrank the withholding tables so that you'd get about $600 extra in your paycheck during the course of the year -- so you got most of the credit "up front."

The problem for couples who like a small refund is that EACH paycheck got shrunk by $600 -- that's $1,200 in "up front" money for a credit that's only $800.

And it gets worse. If you or your spouse worked a second job -- shrinkage there, too. If you or your spouse are collecting Social Security, VA Disability or other government pensions, there was a $250 bump in your check last May-June and that comes off you $800r Credit.

So under the wrong circumstances, a couple could easily find themselves with a $1000 or greater tax liability.

[dionysus]

46. nope

n/t

[sybylla]

47. Opposite for me.

We're getting more back, but that's because we forget how much the college tuition credit really helps. With two sons in college, we're getting a nice check back to help out with what I hope is the final year or two.

[JohnnyBoots]

49. Yes. I even got pinged for student loan interest that was supposed to be held for the two years I

was in AmeriCorps. It was bullshit, still trying to recover.

[Phx_Dem]

50. Exactly the opposite for me. Got a refund from state and only owed $281 to Feds.

Previous years, we've owed between $700-1,100 to Feds.

I'm thrilled this year.

[Hansel]

51. Nope. Got more back than I have in years.

Thanks to Make America Works and deductibles for putting in new doors and windows.