Every year I get back a few hundred in my return, so of course I’m excited to get my W2. I add everything up and it looks like I’m getting $500 bucks back. Oh wait, don’t subtract line 9 from line 10, subtract line 10 from line 9. I owe these assholes $500 bucks? WTF? I’m soooo tempted to send them a note telling them to fuck themselves. I don’t give a shit, let them come get me.
First, consult with a tax preparer. Next, collect all fo those receipts for specific deductions and write-offs that you qualify for. There are so many of them out there and that’s why a tax preparer is a huge help.
Expenses for business and mileage for business(if applicable) and fees for schooling and education and professional associations-for you, trips to music-related things if you make any money on your music, Etc.
Really though, a tax expert is always a good thing to have. I used to slog through my own taxes and I always got a return. But since getting a tax guy, my returns are so much more substantial that it outweighs the amount of money I make. Even H&R Block would be a good idea since they’re relatively inexpensive.
Isn’t it better to owe than to get back, generally speaking? If you get a return, that means you gave Uncle Sam a interest-free loan, doesn’t it? So you should be happy, WE. You didn’t give Uncle Sam a interest-free loan, unlike so many other Americans.
If you are getting a return, that means that you overpayed taxes throughout the year, and had less of your own money available throughout the year, while Uncle Sam was getting a little bit of a ‘loan’ at 0% interest, throughout the year. Sure, most people (myself included) love getting a fat return check, because it’s like ‘free money’, but you are just getting your own money back.
That you owe money just means that you had more of your own money available to you throughout the year.
That doesn’t seem to make sense either though. Last year I got a few hundred bucks back, this year I owe a few hundred. My pay hasn’t changed in at least two years, so something else must have. I’m trying to determine what that might be. Only difference this year was my bonus was a few thousand more then last.
Since you said you got a W2, I am assuming you are not self employed, or at least are not the of your income self employed. Are you married?
The only way you can owe if you are not self employed, is to earn income other than W2 wage income (dividends, interest, capital gains, gambling, other non-wage income), or claim more withholdings than you are entitled to on your W4 for a given year, claim the wrong status on your W4 (i.e. married when single, single when married, etc.).
Generally, owing a slight amount at the end of the year is good, but that assumes that you have maximized all legal deductions already. This is largley a psychological effect that makes a “refund” seem like a good thing, and to many, that outweighs the potential opportunity cost of loaning the govt. a small amount over the course of a year.
Last thing, if you do actually owe, is to pay on the last day Might as well make the best use of the money while you can. Stick it to the man any way you can.
Ah – that’ll do it. Most employers withold taxes from bonus pay on using different and lower schedule than regular pay. So you might indeed owe this year. That said, I’ll repeat the advice which you seem wisely inclined to take – go ahead and get a pro to help you out.
Brutus is right, as you also see, about the whole “I owe them” vs. “They owe me” thing. That he’s right philosophically doesn’t make it sting any less when the “right” result comes as an unpleasant surprise though. My condolences. Best of luck with the pro.
I should add that the amount direct deposited into my acct every other week was identical in 2003 and 2004, so I don’t understand how I could have paid less tax. Wouldn’t I have gotten a little more money each check?