(To finish the thought)
There’s a third - the withholding tables published by the IRS.
Over the past couple of years, they’ve really tightened them up to where there’s really not a lot of extra withheld (based on what you claim on your W-4). I’ve seen a lot of folks come in expecting a refund, because they’ve always gotten one, only to find that they owe.
I think you’re expecting too much from the withholding formulas. If your salary goes up during the year, then the checks before that would have too little taken out since they were computed in anticipation of you being in a lower bracket. All they can do is annualize your pay for the period in question and compute a reasonable amount to withhold based on that. If that annual project flucuates during the year, then the total held back throughout the year isn’t necessarily going to exactly equal your annual tax liability.
If you can get it a Social Security number maybe! I wonder how many people they have named Philip O’Dendron, anyway 
Back to the original question - I remember a few years back they changed the withholding rates so that though your tax bill was the same, you got a little more take-home in each paycheck. Which led to people having smaller refunds, or more people owing.
What pisses me off about the whole scheme is there’s really no good way of telling just how much you’ll have taken out of the paycheck given your income amount and proposed filing status / deductions. Say, 1,000 a week, married, 2 deductions, = withhold 200 dollars a week (or whatever). Since we’ve got an odd situation (household employee, we have to withhold enough to cover her FICA etc.) it’s been a crapshoot as to whether we’re having enough withheld in any given year. 2 years ago, insane refund so we dropped our withholding. Last year, enough owed to trigger a penalty so we bumped up our withholding. This year, even more insane refund, in the “decent used car” territory.
The IRS tool that tells you what you should elect is pretty useless - it gave me settings that would have led to us owing money. All it tells you is that you should do, say, “Married, with 2 deductions”.
I don’t mind owing a little - that’s the “ideal” way of doing it. Still, I wish there were a reasonable way to be sure you really will owe only a little!
I got money to go to medical school from a couple of private organizations in exchange for a four-year commitment to work in eastern Kentucky. Essentially, every month I work, 1/48 of the $96,000 in loans gets forgiven. It was not until I got the 1099-MISC from one of these organizations that I realized I’d have to pay taxes on the forgiven amount.
I mean, it makes sense why I should have to, but it still sucks. I will still get a small refund, but not very much.
$100 is not all that much off, especially considering that your income changed at least twice during the year. If you really want to get a refund (as mentioned above, that means giving the government an interest-free loan), tell your next employer to withhold an extra $x per paycheck above the regular withholding.
OP:
Here’s a possible solution: contribute $X to a 2005 IRA, where $X is the amount of deductions you need to take to compensate for the $100. You have until April 15th to do so.
Now, if you don’t have the hunny, then you don’t have the 4 or 5 hunny that it’s going to take to pull this off, but that’s the first thing that came into my mind.
(yes, I fully expect someone to come along and tell me that that’s wrong for some totally obvious reason, but it makes sense to me on the surface).
I realize in the grand schem of things, $100 is a pittance, but it’s just that I’ll be in a money crunch for a while and extra money would have helped immensely, whereas now paying money does not help. I just expected to get money back, sicne I’ve gotten money back every other year I paid taxes. And being that this is the first year I wasn’t claimed as a dependant by my parents, I was actually expecting even more than usual.
Won’t the IRS stick you with a fine for underwithholding if you owe that much at the end of the year?
Depends on what your taxes were like the prior year. If you withheld 90% (say, that 2,500 was less than 10% of total taxes owed for the year) then no penalty. Likewise if your withholding was enough to cover 100% of the taxes due for the previous year (say, last year’s tax bill was a total of 1,000; this year’s was 10,000; no penalty if you withheld at least 1,000 this year). Some tweaks - if your income is high enough, that percentage goes from 100% to 110% for example so you’d have to withhold at least 1,100 to be penalty-free.
Taxes are due on April 15th. If you can arrainge otherwise, there’s no reason to give the Feds an interest-free loan until then.
BTW, we figured it out…my super new 2nd job (good pay, little work) just bumped us into the top tax bracket.
If you have a business, you can deduct the business expenses even if you don’t itemize. The business expenses go on Sch C while the itemized expenses go on Sch A. If you had some business, take the deductions.
The business expenses that would go on Sch A are for business expenses that you paid for your employer but didn’t get any reimbursement. For example, you drive out to a customer to drop off some product but don’t get reimbursed for mileage.
If you live in the US, when you were hired you filled out a W-4. On that form, you stated your marriage status, the number of exemptions you wanted, and if you wanted any extra withholding.
You can see a W-4 here (warning, .pdf): http://www.irs.gov/pub/irs-pdf/fw4_05.pdf
As you can see, there is no box for “make my taxes come out even” or “withhold the normal amount.”
Single with zero allowances will withhold the greatest amount. Married with a ton of allowances (or exempt) will without the least amount (or zero).
The only time your employer will do anything with this form is when you are entered on the payroll. If you choose “exempt” you will have to resubmit the form every year. Otherwise, the form stands until you submit a new form. Your employer cannot change this withholding without a signed W-4 from you.
It’s a good idea to check your allowances halfway through the year to make sure you are on target. If you aren’t, make a change to your W-4.
You can still deduct a kid without a social security number- all you have to do is put “applied for” under “social security number”. They might ask you for something like a birth certificate to prove the kid exists, but that’s about it. You don’t lose a tax break and Uncle Sugar doesn’t get your 800 bones.
And Bouv, as others have said, it’s up to you to change your W4. Afterall, you are the one responsible for your tax and how much is taken out of your check.
You could always file an extension request, assuming that in three or six months your financial situation will have improved.
You’re still supposed to pay any taxes due by April 15th, or penalties and interest will be imposed.
My employer decided that regardless of what I wrote on my W-4 they were going to withhold the amount for a single person according to the tables.
I had to go argue with them to get it fixed.
How about never, ever giving tax advice again to anyone. Extensions allow you to file the forms later, they don’t allow you to pay when you’re in a better financial position. Considering that his forms are complete anyway, an extension would buy him nothing.
bouv, no one other than you is responsible for your withholding. You need to figure that out for yourself.
Yeah, the extension thing is a bad idea. That said, you can call the IRS at 1800-829-1040, wait for a while, and talk to someone. They are generally pretty easy going about setting up payment plans.
What jsgoddess said. You must have filled out a form claiming a certain number of deductions when you were hired. I always take two, which is the right amount for me (and for yourself I think); one for not being a dependant of anyone else, and one for… I don’t remember now. There’s some other one that applies.
Anyway, this year I’m going to be paying a whole ton of taxes (in a relative sort of way). Due to dire financial straits (money for nothing… hah!) I took an early distribution from my 401k. They automatically took out a percentage, but I’ll still have to pay another 10% still.
Also, I am (amongst other things) a self-employed musician, and I have to pay taxes on all of my income from gigs and such, which do not get taxes/SS automatically taken out. Usually I have a lot of deductions which counter-balance this, but also due to circumstances I didn’t end up documenting most of those deductions, so I won’t be taking them this year.
sigh Money’s a bitch.
Yeah, but for a hundred bucks, that’s a bad idea too, in my opinion. There’s a $43 fee, plus you still pay interest, plus you may still pay penalties. bouv will have doubled the debt by the time it’s paid off.