#1
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Anyone else get hosed on Taxes this year?
We made a cross country move this year and updated the tax forms with our employers (we assumed) and somehow saw a HUGE swing in our taxes to where we owed several thousand dollars. To top it off, this somehow puts us into getting 1040-es quarterly payment vouchers for 2024 that we have to pay ON-TOP of the taxes already being withheld. These payments equate to double what we ended up owing this year. The best part is payment one is due April 15th as well meaning I need to pay another 50% of what I paid this year immediately.
Any tax people here want to give me their thoughts? |
#2
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You didn’t get hosed you just had the use of some of your tax payments throughout the year.
Just pay quarterly what you need to come out right at the end of the year. I work for myself so if I am making less than the year before I pay less quarterly than calculated based on the prior year. You only get interest and penalties if you don’t put in the correct amount for the year spread over the 4 payments. Just pay what you owe over that withheld. Jeff |
#3
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Last year we owed more than we owed in the prior 10 years combined.
This year we get a little back. It's all just whether we keep money and pay it at the end or we don't keep the money and don't pay it at the end. |
#4
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Wait, you're *required* to submit quarterly payments, on top of your W2 withholdings?
Seems like double jeopardy to me. I always assumed that the quarterly payments were, um, optional. If you underwithheld, or underpaid quarterly, you might owe a penalty on top of the total due...but I never heard that quarterly was mandatory... ICBW.
__________________
Colnagi Seven Sampson Hot Tubes LiteSpeed SpeshFatboy |
#5
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I am aware of the math of the taxes and I ended up paying the correct amount this year. I’m OK with all that.
Getting hosed is doing everything you’re supposed to do, owing taxes you didn’t anticipate, and being required to not simply correct it for this year but significantly over pay with no notice. For people who are less fastidious it’s easy to see how they could get into issues quickly with the IRS. |
#6
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So my choices are to correct the error in my withholding submitted by my employer now, or do it in 2025. The only difference is how big of a refund I’ll see in 2025. Either way I still have to make extra quarterly payments for 2024 that will end up making me overpay by 100% of what I owed this year. Makes no sense. I’m not self employed and don’t have any crazy tax situations. Normal guy with a w-2. |
#7
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In a similar boat. Haven't nailed down retirement taxes and what is being paid vs what isn't. Last year, got slammed by the state but refund from the Fed, so I started quarterly+what was previously being taken. Helped a lot of the state, but I didn't bother with the Fed because of the refund. Bad move. I'll be paying that quarterly, too. I'm not getting taxed twice, just not enough the first time |
#8
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Wife started collecting social security but we are still working. SS didn't take taxes out so we are writing bit of a check, in mail tomorrow.
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#9
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I feel like a got burned this year. Not sure what happened but Uncle Sam could buy a used Pegoretti with Campy 12 with my $$.
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#10
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2023 was my first year retired. My main income is my military retirement which is no longer taxed by Arizona. In 2023, I had less than $1100 in social security wages, most of which was from substitute teaching. I left my military retirement at Single/0 for the max withholding until we figure it all out. My teaching and umpiring is now all 1099 income because each has mileage deductions that should cover any taxes. I don't think we'll have to write a check this year. My wife has a business that turns low profit but it's complex enough that we pay an accountant.
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#11
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I'm a W2 employee. I don't get to write-off anything. I don't get to hide anything. I don't get to move this over here and that over there and somehow have zero tax liability - so yeah, there's a club, I'm not in it - and I'm getting hosed...
But who cares. I live in my reality, not an alternate one. And I got to ride my road bike today in that warm California sun. Yolo. And I'd rather not spend it worrying about how others are doing relative to me.
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Io non posso vivere senza la mia strada e la mia bici -- DP |
#12
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To avoid an underpayment penalty, if one's adjusted gross income (AGI) is less than $150,000, the total of withholding and estimated payments must be either 90% of the current year's tax or 100% of the previous year's tax, whichever is less. If one's AGI is over $150,000, the total of withholding and estimated payments needs to be the lesser of either 90% of the current year's tax, or 110% of the previous year's tax. See this page from the IRS: https://www.irs.gov/taxtopics/tc306 There is no scenario I am aware of that would necessitate paying more than 100% or 110% of the previous year's tax during the year to avoid a penalty. You *will* have to pay whatever additional tax you owe in April however. So if in 2024 you will actually owe double what you paid in 2023, you will need to send a big check for that balance in April 2025. It's nice to keep the taxes owed in your savings account, earning interest, provided you have the discipline not to spend it. You can really screw yourself if you don't have the money to pay your taxes owed come April 2025. Your tax preparer probably set you up with large estimated payments so that you'll end up owing nothing. If you don't like the arrangement look into changing your estimated payments to give yourself a bit more breathing room during the year. Just remember anything you don't pay now you still have to pay later. If you have questions, consult your tax professional. Last edited by dgauthier; 04-08-2024 at 02:29 AM. |
#13
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#14
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You just have to show a profit periodically so that it looks different from the parts arbitrage hobby that the rest of us partake in.
__________________
Colnagi Seven Sampson Hot Tubes LiteSpeed SpeshFatboy |
#15
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These days, I just have my employer withhold an additional chunk each pay cycle to be sure we're closer to even with the IRS come April. Prior to that, we'd regularly be under-withheld (despite having two normal salaries with very little investment income most years). I assume because we're both high-earners that the bracket math just works out against us. So, $100/paycheck extra withholding seems to keep us square. Could be worse - we've had years with enough investment income to trigger AMT. That's always hellish. |
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