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income tax - recommended resources?

income tax - recommended resources?

Old May 6th 2008, 4:30 pm
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Default income tax - recommended resources?

Hi,

I'm trying to make an educated guestimate as to what my husband's take home salary is likely to be when we move over to Dallas in a couple of months.

I'm struggling to get any basis for predicting what he might pay in taxes.

Can anyone recommend some calculators and/or straightforward, easy to use decent websites where I might get a better of understanding of how it will all work?

In particular, I haven't quite got my head around the whole idea of deductables, or withholding (is that a bit like paye???)....

Any help would be most appreciated...

Thanks in advance...

Rebecca
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Old May 6th 2008, 4:41 pm
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Default Re: income tax - recommended resources?

http://www.hrblock.com/taxes/tax_calculators/index.html

While you file your taxes every April 15, the amount you owe is generally 'withheld' from each paycheck throughout the year. Withhold too little, and on April 15 your write a check. Withhold too much and on April 15 you get a refund.

Deducations (reductions in the amount of income you have to pay tax on) can be for a variety of reasons, most notably your state income taxes, mortgage interest if you buy a home, charity, and a few other things.

Try out the calculator or do a search for 'income tax calculator' or 'take home pay calculator' to determine what you will have each month.

Good luck
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Old May 6th 2008, 4:45 pm
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Default Re: income tax - recommended resources?

You pay what you want to pay out of your pay check. What your tax contribution will be at the end of the year is a different story and will vary wildly depending on how many children you have, if you have a mortgage, 401k contributions, if you pay medical insurance and about 1001 other reasons. IRS.gov has the tax tables about how much yearly tax you owe based on what you earn but figuring out what you earn will be the hard part. You can go through turbotax.com for free and just use fake info to get an idea of all the factors that are involved.
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Old May 6th 2008, 6:12 pm
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Default Re: income tax - recommended resources?

We move to Houston at the end of this month and found this calculator very helpful: www.paycheckcity.com

It also takes you through a W4 form that calculates how many allowances that you can claim. With hubby working, me not working an 1 child we reckon we have 4 if that helps at all.

The way we are looking at it (and please correct us if we are wrong anyone) is that at the end of the year we can itemise other things that we don't need to pay tax on like pension contributions, mortgage interest etc and if we have paid too much tax we get some back and if we have paid too little we owe the IRS.

Luckily hubby's work pay for a tax person to do our return at the end of the first year so we will just pay lots of attention then.
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Old May 6th 2008, 6:21 pm
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Default Re: income tax - recommended resources?

Originally Posted by rebs View Post
Hi,

I'm trying to make an educated guestimate as to what my husband's take home salary is likely to be when we move over to Dallas in a couple of months.

I'm struggling to get any basis for predicting what he might pay in taxes.

Can anyone recommend some calculators and/or straightforward, easy to use decent websites where I might get a better of understanding of how it will all work?

In particular, I haven't quite got my head around the whole idea of deductables, or withholding (is that a bit like paye???)....

Any help would be most appreciated...

Thanks in advance...

Rebecca
Depends on tax bracket and other factors, such as how much he'll be paying into 401k, medical cover, and as Duncan Roberts says a thousand other reasons. What's his top line going to be? You can roughly figure out his tax bracket from that.
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Old May 6th 2008, 6:46 pm
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Default Re: income tax - recommended resources?

Originally Posted by ChocolateBabz View Post

The way we are looking at it (and please correct us if we are wrong anyone) is that at the end of the year we can itemize other things that we don't need to pay tax on like pension contributions, mortgage interest etc and if we have paid too much tax we get some back and if we have paid too little we owe the IRS.
Pretty much. Things like medical, dental, vision and prescription insurance, 401K contributions and flex account contributions, basically stuff that gets taken out of your paycheck pre-tax will not need to be itemized as your W-2 will already have all that built into your net taxable income.

The main problem with estimating what a paycheck will be is that you potentially have a lot of taxes as well as other things being taken out. For instance, you could have some or all of these taken out. Federal tax, state tax, city tax where you work, city tax where you live, medicare, social security, medical insurance, dental insurance, vision insurance, prescription insurance, 401k/403b contributions, long term disability, short term disability, life insurance, charity donations, flex account contributions, parking, meals, plus more.
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Old May 7th 2008, 4:40 pm
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Default Re: income tax - recommended resources?

Thanks everyone - that was just the kind of thing I was looking for.. plenty for me to read and calculators to mess around with
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Old May 7th 2008, 8:28 pm
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Default Re: income tax - recommended resources?

it also seems to be 'the done thing' to overestimate the tax withholding - and therefore get a large refund at the year end. You even see stores advertising special deals for tax refund cheques. Its not like UK payee where you get paid and taxed an exact amount thats generally correct.

make sure an incidental expenses you are given as part of the move from your husbands firm are 'tax protected'. IE - they cover the tax on them . Otherwise the expenses are counted as salary recieved and you are taxed on it.
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Old May 7th 2008, 8:54 pm
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Default Re: income tax - recommended resources?

Originally Posted by MsElui View Post
it also seems to be 'the done thing' to overestimate the tax withholding - and therefore get a large refund at the year end. You even see stores advertising special deals for tax refund cheques. Its not like UK payee where you get paid and taxed an exact amount thats generally correct.
It's weird. I have to claim married and 2 but claiming at the single rate and my wife claims married and 3 so we can break even next year. A refund once a year is nice but it's nice and easy to just figure out what refund you want, say $5000, split it into 26 pieces (or however often you get paid) and then direct deposit that "refund" via your paycheck into a savings account, then you get the nice big "refund" at the end of the year plus the interest. Plus if you need it, you have it right there.
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Old May 7th 2008, 9:07 pm
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Default Re: income tax - recommended resources?

Pretty common to use excess withholding as a enforced savings plan - if you haven't got it you can't spend it. I agree it's not very smart, and we don't do it that way.
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Old May 8th 2008, 1:35 am
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Default Re: income tax - recommended resources?

Have no fear. You will be under taxed, like all Americans are.

You can go to the IRS website and download all the forms for tax filing, and then go through the process of preparing a make believe return based on what you think your income will be. Figure out your deductions, arrive at your taxable income and then go to the charts to see how much tax you should pay over the course of the year. Download the 2007 form 1040 to calculate your deductions and your estimated income...then download the 2007 tax table and work out your total taxes. Remember that you will also pay Social Security and Medicare taxes. And then you need to know if there is a state income tax where you are going.
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Old May 8th 2008, 2:54 pm
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Default Re: income tax - recommended resources?

I thought I had worked out how much tax we would pay, then my husband got his annual bonus and they took a huge lump of it in tax, which we have to reclaim next year
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Old May 9th 2008, 12:19 am
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Default Re: income tax - recommended resources?

its notorious that bonuses are hit hard as it cant seem to work out thats not a regular monthly income. A friend of ours told HR they had 10 kids the week before bonus so that less was taken. then corrected it a week afterwards. They did this every year with no issue! It meant a more realistic amount was taken in tax so the refund wasnt too huge at the year end. Luckily for us = my husbands bonus is just before tax year end - so if they take a lot - he wont have to wait too long to get a refund.
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Old May 9th 2008, 7:14 am
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Default Re: income tax - recommended resources?

quick question, please...

who determines the withholding? is that something we decide and then tell HR? or will HR automatically determine how much based on what they know of our circumstances?

IF we did nothing, does that mean no tax would be withheld and we would be liable for any amount we owed IRS at the end of the tax year?
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Old May 9th 2008, 11:51 am
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Default Re: income tax - recommended resources?

Originally Posted by MsElui View Post
its notorious that bonuses are hit hard as it cant seem to work out thats not a regular monthly income. A friend of ours told HR they had 10 kids the week before bonus so that less was taken. then corrected it a week afterwards. They did this every year with no issue! It meant a more realistic amount was taken in tax so the refund wasnt too huge at the year end. Luckily for us = my husbands bonus is just before tax year end - so if they take a lot - he wont have to wait too long to get a refund.
LOL it is tempting to try the 10 children trick next time! Hubbles got his bonus right around the time we filed our taxes so I suppose it'll be that date every year. I should probably be grateful he got a bonus at all seeing as he's in property development...
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