Filing Taxes for 2006
#196
Re: Filing Taxes for 2006
Originally Posted by fatbrit
Paying money is good! Be happy!
I would rather have the correct amount of tax deducted each pay check, so at the end of the year I neither owe or am owed any money. Like the good old Inland Revenue were able to achieve.
#197
Re: Filing Taxes for 2006
Originally Posted by John Murray
Not good when I wasn't expecting it
I would rather have the correct amount of tax deducted each pay check, so at the end of the year I neither owe or am owed any money. Like the good old Inland Revenue were able to achieve.
I would rather have the correct amount of tax deducted each pay check, so at the end of the year I neither owe or am owed any money. Like the good old Inland Revenue were able to achieve.
Have you started your pension yet? Consider bunging some money in an IRA. You've got till Apr 15 to do it and still count as last tax year and reduce your payment.
If you really want to pay more (and I'm loathed to tell you how to do it), add up how much extra you want to pay next year, divide this figure by the number of pay periods, and bung it in box 6 of your W4 -- leaving everything else the same. Then submit to the idiots at HR to lose for you. You can check they've lost it by reading your paycheck.
Last edited by fatbrit; Jan 23rd 2006 at 8:17 am.
#198
Lost in BE Cyberspace
Joined: Oct 2003
Posts: 22,105
Re: Filing Taxes for 2006
Originally Posted by fatbrit
Have you started your pension yet? Consider bunging some money in an IRA. You've got till Apr 15 to do it and still count as last tax year and reduce your payment.
On the rest of your post......do you think someone should add quite a few deductions and then put money into an account? The problem being, of course, is how much money to invest and being good enough to do it.
#199
Re: Filing Taxes for 2006
Originally Posted by AmerLisa
Really??? I've just did a rough figure of our taxes and we are going to owe $389. But my husband was telling me last night he needed to start contributing to his 401k, is that the same thing as an IRA? Forgive me for being an airhead about this..... I did read that contributions to a 401 is tax deductible, right?
On the rest of your post......do you think someone should add quite a few deductions and then put money into an account? The problem being, of course, is how much money to invest and being good enough to do it.
On the rest of your post......do you think someone should add quite a few deductions and then put money into an account? The problem being, of course, is how much money to invest and being good enough to do it.
401k and a standard IRA are similar and different!
How is his 401k matched?
How much is he thinking of bunging in every year (approx)?
How long is he thinking of staying with the company?
Who invests the 401k plan?
#200
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,883
Re: Filing Taxes for 2006
Originally Posted by John Murray
2005 tax year will be my first full year here in US. I'm using Turbotax to file online - but so far, after entering our W2 information, we owe Uncle Sam a couple of thousand! :scared:
I guess we screwed up the W-4 form. My wife and I both but down Married, and only one exemption on each of our w4's at work. We both earn about the same and pay about the same tax.
What should we put on the w4 form to prevent us having to pay money at the end of next year?
I guess we screwed up the W-4 form. My wife and I both but down Married, and only one exemption on each of our w4's at work. We both earn about the same and pay about the same tax.
What should we put on the w4 form to prevent us having to pay money at the end of next year?
Have you tried running the numbers as married filing separately? If your incomes are roughly equal, there's a possibility it may result in a lower tax liability.
#201
Re: Filing Taxes for 2006
Originally Posted by Giantaxe
I guess what's happening is that your combined income is pushing you into a higher marginal tax bracket than your two incomes separately do. On the W4 you have the option of withholding at the single rate even if you are married. That will have the effect of causing the amount of tax to be withheld to increase. Or, as has already been suggested, you can do your own 'fudge' by asking for an extra dollar amount to be withheld from each paycheck.
Have you tried running the numbers as married filing separately? If your incomes are roughly equal, there's a possibility it may result in a lower tax liability.
Have you tried running the numbers as married filing separately? If your incomes are roughly equal, there's a possibility it may result in a lower tax liability.
#202
Re: Filing Taxes for 2006
Originally Posted by fatbrit
It's good! You've borrowed the money off the government tax free!
Have you started your pension yet? Consider bunging some money in an IRA. You've got till Apr 15 to do it and still count as last tax year and reduce your payment.
If you really want to pay more (and I'm loathed to tell you how to do it), add up how much extra you want to pay next year, divide this figure by the number of pay periods, and bung it in box 6 of your W4 -- leaving everything else the same. Then submit to the idiots at HR to lose for you. You can check they've lost it by reading your paycheck.
Have you started your pension yet? Consider bunging some money in an IRA. You've got till Apr 15 to do it and still count as last tax year and reduce your payment.
If you really want to pay more (and I'm loathed to tell you how to do it), add up how much extra you want to pay next year, divide this figure by the number of pay periods, and bung it in box 6 of your W4 -- leaving everything else the same. Then submit to the idiots at HR to lose for you. You can check they've lost it by reading your paycheck.
#203
Re: Filing Taxes for 2006
Originally Posted by John Murray
Fatbrit - Forgive my ignorance - but if I have a 403(b), could I still open an IRA; contribute an amount equal to the amount due to be paid to Uncle Sam, and leave my tax owing figue for this year at zero?
The answer to your question is yes -- provided you don't earn too much and you don't contribute too much to it. You've also got a great holding account set up for your 403(b) were you to leave your job. Whether it is useful to you depends on how old you are and where your retirement planning is. Wouldn't say the IRA is as flexible or useful as the Roth IRA, but it does have the advantage that it is fully deductible now against your current tax bill.
#204
Lost in BE Cyberspace
Joined: Oct 2003
Posts: 22,105
Re: Filing Taxes for 2006
Originally Posted by fatbrit
You can't do the tax trick with a 401k, I'm afraid!
401k and a standard IRA are similar and different!
How is his 401k matched?
How much is he thinking of bunging in every year (approx)?
How long is he thinking of staying with the company?
Who invests the 401k plan?
401k and a standard IRA are similar and different!
How is his 401k matched?
How much is he thinking of bunging in every year (approx)?
How long is he thinking of staying with the company?
Who invests the 401k plan?
#205
Re: Filing Taxes for 2006
Originally Posted by fatbrit
The 403(b) is just a 401(k) for non-profits. Most (if not all) of the advice about a 401(k) you find on the web applies equally to a 403(b) -- it's just that they tend not to mention it.
The answer to your question is yes -- provided you don't earn too much and you don't contribute too much to it. You've also got a great holding account set up for your 403(b) were you to leave your job. Whether it is useful to you depends on how old you are and where your retirement planning is. Wouldn't say the IRA is as flexible or useful as the Roth IRA, but it does have the advantage that it is fully deductible now against your current tax bill.
The answer to your question is yes -- provided you don't earn too much and you don't contribute too much to it. You've also got a great holding account set up for your 403(b) were you to leave your job. Whether it is useful to you depends on how old you are and where your retirement planning is. Wouldn't say the IRA is as flexible or useful as the Roth IRA, but it does have the advantage that it is fully deductible now against your current tax bill.
Someone else suggested trying filing married but filing separately - so I'll try that first. If that doesn't work, I'd much rather save $2k in a retirement fund than send it to Uncle Sam.
#206
Re: Filing Taxes for 2006
Originally Posted by John Murray
Someone else suggested trying filing married but filing separately - so I'll try that first. If that doesn't work, I'd much rather save $2k in a retirement fund than send it to Uncle Sam.
#207
Re: Filing Taxes for 2006
Originally Posted by fatbrit
You can try the effect of a Traditional IRA on your tax bill by just telling TurboTax you've opened one. Put dummy data for the account details in the fields except for the amount and it'll recalculate for you with the deduction. Then, if you go ahead put the real data in; if not just delete it.
P.S. Check the earning limits before you plan hard. They're not that high. Some may not slip through.
#208
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,883
Re: Filing Taxes for 2006
Originally Posted by John Murray
Karma and a virtual pint on it's way.....
Someone else suggested trying filing married but filing separately - so I'll try that first. If that doesn't work, I'd much rather save $2k in a retirement fund than send it to Uncle Sam.
Someone else suggested trying filing married but filing separately - so I'll try that first. If that doesn't work, I'd much rather save $2k in a retirement fund than send it to Uncle Sam.
Btw, contribution deductibility is also limited by income. For example, if you file mfj and your combined total income is over $75k you're out of luck - none of the contribution will be tax deductible.
#209
Re: Filing Taxes for 2006
Originally Posted by Giantaxe
Remember that your IRA contribution is a deduction from income rather than a credit for taxes paid. Thus contributing $2k will save you $2k x whatever your marginal tax rate is in taxes. You'll need to contribute a lot more than $2k to get $2k of tax savings, which probably means you'll hit up against the IRA contributiion limits.
Originally Posted by Giantaxe
Btw, contribution deductibility is also limited by income. For example, if you file mfj and your combined total income is over $75k you're out of luck - none of the contribution will be tax deductible.