[polyhymnia]

I noticed on my last two paystubs (I am paid biweekly) that my takehome pay went up by about $20. After further investigation I discovered this is because my Federal Income tax has gone down. It seems this may be due to a new tax initiative? But I am not clear if this is money that I get to keep FOR GOOD, or just a different way of calculating taxes and I'll still owe it at the end of the year?

We just did our 2008 taxes and owed about $1500. Now I am happy with this, would rather owe than get a refund, but I am concerned that if I am paying out less in taxes now we will owe even more next year, and potentially have a penalty to pay - is this a valid concern?

 

[maybemom05]

I'm not a tax attorney or a CPA, but you can go out to the IRS website and pull up Pub 919. It has a worksheet that will help you analyze your withholdings and make sure you're having enough taken out.

Hope this helps.

 

[Denvergirlie]

This is the new Obama "making work pay" $400 tax credit for 2009 and 2010.

It will mean another $400 per person/ $800 per couple take home. In 2009 it will be more each paycheck because it didn't start until March. In 2010, it will be spread out over the full year.

http://www.irs.gov/newsroom/article/...204447,00.html

 

[polyhymnia]

Quote:

Originally Posted by maybemom05 I'm not a tax attorney or a CPA, but you can go out to the IRS website and pull up Pub 919. It has a worksheet that will help you analyze your withholdings and make sure you're having enough taken out. Hope this helps.

Thanks - the reason we owe each year is due to DH's bonuses, which are unpredictable. If not for the bonuses we'd be a-ok, so we are leaving it for now. I wish his company just taxed bonuses at the higher rate like mine does

Anyway, it's usually only about $1000-1500 I just didn't know how this new thing would affect it.

Quote:

Originally Posted by Denvergirlie This is the new Obama "making work pay" $400 tax credit for 2009 and 2010. It will mean another $400 per person/ $800 per couple take home. In 2009 it will be more each paycheck because it didn't start until March. In 2010, it will be spread out over the full year. http://www.irs.gov/newsroom/article/...204447,00.html

Thanks! That's great. I tried googling "tax cuts" and it was really not very helpful. So, this is like our economic stimulus rebates last year - money we get to keep and not pay back? Just doled out per paycheck rather than a lump sum?

MTA: Actually, looking at that I am worried again. It looks like depending on DH's bonuses we will be above the threshold where it is phased out. So, since my company's adjustments to my withholdings doesn't take his salary into consideration... probably we'll end up owing some of it back?

 

[Denvergirlie]

Quote:

Originally Posted by polyhymnia Thanks! That's great. I tried googling "tax cuts" and it was really not very helpful. So, this is like our economic stimulus rebates last year - money we get to keep and not pay back? Just doled out per paycheck rather than a lump sum? correct - assumption that you the person will spend it, thus also stimulating the economy. Where as the checks largely got sent to debt/ savings and wasn't that much of a stimulus after all. MTA: Actually, looking at that I am worried again. It looks like depending on DH's bonuses we will be above the threshold where it is phased out. So, since my company's adjustments to my withholdings doesn't take his salary into consideration... probably we'll end up owing some of it back?

Also, correct. Many married couples will get hit with not enough tax whitholdings at the end of the year. Will be best to do the IRS calculator in a few months and then again perhaps in early October, so one can best estimate and then make any withholding changes at those times.

 

[polyhymnia]

Quote:

Originally Posted by Denvergirlie Also, correct. Many married couples will get hit with not enough tax whitholdings at the end of the year. Will be best to do the IRS calculator in a few months and then again perhaps in early October, so one can best estimate and then make any withholding changes at those times.

Thanks

I guess we will do this this year, because I'm afraid of a penalty if we have $1000-1500 owed "normally" and an additional $400-800 because of this.

Although I was able to clarify that the phase out *begins* at $150,000 for married-filing-jointly, not *ends* at $150,000 which is a bit of a relief. Since we didn't get raises this year (due to the economy - sad, but we are just grateful to still have jobs!) I think we will be okay unless DH's bonuses this year are excellent.