federal tax question...

[beansmama]

So, i've been noticing that DH's paychecks aren't taking out much federal income tax. His checks average around $900 and he claims 3 for federal and state (since ds is due this month, legally we can claim 3 this year - right?)...

Anyway, last month the first check only took out 2 cents. The next check took out about $13.00. The most recent check took out nothing. This is stressing me out.

What's going on? Help? I don't wanna owe money come the end of the year - i prefer the huge refunds we normally get, lol

[notjustmamie]

He's probably not making enough to have any taxes withheld.

And, yes, if you'll be having a baby this year, you get to claim a dependent for the full year.

If you'd really rather the government "saved" your money for you, you can lower the number of exemptions (just have him fill out another W4 form), but unless his salary is quite variable, you'll probably be fine.

Also, depending on how much you make the full year, you may still be getting a refund. Things like student loan interest, and other deductions will cut down on your tax burden, plus, if your income is low enough (and the numbers get pretty low when you start adding kids) you may qualify for the earned income credit and/or additional child tax credit which are over and above any money that you have had withheld for federal taxes.

[milletpuff]

Would you mind posting what his annual gross income is? It sounds like he's paid twice a month, so I am estimating $25 - 30k-ish? If this is your only income, and you two are married, then he should not be having much, if anything, withheld for federal tax because you three will probably not have any tax liability for the year.

There's also the Making Work Pay tax credit that started in about April, which is $400 and is given to you through your paychecks throughout the year, so basically about $40 less per month is being withheld.

Did you get a refund last year? Or owe?

[beansmama]

He made about $30k last year...his pay is every other friday (so usually twice a month).

This will be his first year filing married with children...he was single last tax year and got a small refund (about $200 from fed and state combined).

And no, i don't prefer the government saving money for me...but being low income with children, i typically have gotten back $4-6k a year for federal tax refunds (with my xh - who made only slightly more than my dh).

I just don't want to end up owing anything at the end of the year!

[milletpuff]

30k minus ~$11k std deduction minus ~ $14k pers exemptions (3 people) = 5K in taxable income, at 10% tax bracket = ~500 in tax liability, but that will get wiped out with the child tax credit, You should then get the additional child tax credit and the earned income credit, which would be refunded to you and could be up to $3,000-ish. And that's basically without any other deductions or credits. For federal, you soooo won't owe anything! So keeping your withholdings as-is is prob fine.

For Oregon, it's really common for people to get federal refunds, but end up owing Oregon. Just keep it in mind, that you may have a small tax bill to the state. Your fed refund should way more than cover it tho.

This also all assumes that you don't have any outstanding debt, defaulted student loans, back child support, etc, cos that will mess it all up.