If one of the people in a marriage makes much more than the other there is a marriage bonus.
That’s why I’m getting back about 2K. (this week hopefully)
Zebra,
I make much more than my wife and there is no bonus.
I believe if one doesn’t work or doesn’t work much than their is a bonus.
The best way to make sure you don’t underwithhold, is to calculated your income and deductions for the upcomin g year, calculate the income tax owed on that amount of taxable income (using last year’s rates) and pay 1/24th of that with each paycheck (or 1/26th if you’re paid bi-weekly)
eg. You expect to make a household income of $60,000 next year. Subtract the exemptions and deductions you know you can take and you can easily estimate (exemptions, real estate tax, mortgage interest) totalling $20,000, leaving $40,000 taxable income. Lets assume that the tax on that $40,000 would be $10,000 (made up number) Divide the $10,000 by 24 paydays, and you should tell them to withhold exactly $416.67 each paycheck.
That doesn’t cover unusual expenses or income, but you can always adjust the withholding in the middle of the year.
Also, if you make a huge profit on the sale of something, in the middle of the year, or other instance of surprise income, you can always use Form 1040-ES to make a payment of estimated income tax.
While I hate taxes as much as anyone else, shouldn’t you be happy you owe something? I try to work it out so that I always owe something at the end of the year. That way I’m not giving the government a free loan, which is precisely what happens when you get a “refund” check.
I agree. I try calculate the withholding so that I owe money at the end of the year, but not enough to incur a penalty. I’d rather have the interest-free loan than give one to the government.
Since I’m just a postdoc, I’m not even considered an employee where I work (a large government research facility). Thus, they don’t deduct any taxes from my paycheck, and I have to pay quarterly estimated taxes to the federal and state governments as though I was self-employed. This means having to remember to save the correct percent of my paycheck each month and fill out paperwork 4x a year on top of end of the year paperwork. Grrr…I would rather they took the taxes off the top so I never even saw that money. Only good benefit is I don’t have to pay FICA.
I figured my taxes this weekend. When my husband left his job in June to go to Baltimore, he took out his 401k to cover some of the boat upgrades as well as the salary gap between jobs. Unfortunately, combine that with the pay raise he got, and it shoved us into the next bracket by about $5K. As a result, we’ve got to scare up just under $1500. Uncle’s gonna hafta wait till April 15 to get it.
Stupid taxes.