Anyone else get hosed on Taxes this year?

[GregL]

I don't think I saw it mentioned, but the best tax shelter for us "W-2 people" is a 401(k)/403(b) (as applicable to your occupation). Max them out as soon as you can in your career.

Greg

[Alistair]

Originally Posted by GregL

I don't think I saw it mentioned, but the best tax shelter for us "W-2 people" is a 401(k)/403(b) (as applicable to your occupation). Max them out as soon as you can in your career.

Greg

Any of the tax-advantaged accounts will work, depending on your income and what accounts are available to you. IRA, Roth IRA, etc.

[GregL]

Originally Posted by Alistair

Any of the tax-advantaged accounts will work, depending on your income and what accounts are available to you. IRA, Roth IRA, etc.

Good point and thanks for the reminder. I focused on the 401(k)/403(b) since they usually have employer matching.

Greg

[prototoast]

I can't speak to your specific situation, but one big trend since 2017 is the standard deduction has been creeping up significantly, while people's ability to itemize has gone down. The state and local tax deduction has been capped at 10K beginning in 2018. For existing homeowners, many of whom refinanced around 2021 when rates were so low, that is significantly reduced their deduction.

This was the first year for me since I was in college that I finally crossed over the threshold from itemizing to standard deduction. When you are itemizing, you are typically taking more deduction than has been taken into account with your withholding, when you take the standard deduction you're not.

I can't speak to your specific situation, but if you have been itemizing, a useful exercise would be to go back over the past couple of years and compare your itemized deductions to the standard deduction.

[rounder]

It did not happen this year, but a few years ago there was an adjustment made to my Federal return which resulted in a corresponding adjustment to my Maryland state return. I received a letter from the state showing that I owed an additional $350 (or so) on my return for that year. I mailed them a check and they credited my return for that year. But the state then snatched the same amount from my current year refund, even though the amount had been already paid. I called the state twice and spoke to agents who both told me that they could see the return was overpaid and I would receive my money, but nothing happened. I then sent a package of the return with all of the attachments to the state and requested a refund. I never from them. It was only $350 but I will never say anything good to anyone about the state's tax department.

[Ken Robb]

Originally Posted by quickfeet

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?

Do you prepare/file your own taxes? If so, do you use a program like Turbo Tax or something similar? Estimated tax payments were always tricky for me to calculate when I was a real estate broker because late-in-the-year deals closing or failing could make big changes in anticipated gross income. Sometimes the cause could totally beyond my control and something as innocent as my principals deciding it would be better for THEIR tax situation to close a deal just before or just after the end of the year.

I did my own tax returns in my youth when I wasn't earning much then had a tax attorney handle them for me. When I was selected for a compliance audit by the IRS I was SO GLAD to send him to meet with the IRS agent. Of course he was armed with every receipt, check stub, etc. they needed and they were all color-coded, alphabetized so he said it was the easiest audit he had ever handled. My wife was an excellent bookeeper and we avoided submitting any "iffy" red flag deductions like home office deduction, country club membership, etc.

Even though I have been retired for years we still have a tax preparer handle our returns because Leslie gets a salary as Director of Music Ministries at our church plus shegives private piano/organ lessons to 30-40 students and that is like running any other small business. Glad to say there is also investment income to deal with so we are very happy to have pro overseeing our tax compliance.

I guess I just wrote a generic advert/promotional piece for tax preparers but mine have helped me sleep better for years.

[KarlC]

Originally Posted by Clean39T

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.

Originally Posted by C40_guy

Here's an idea. Start a vintage Campagnolo parts arbitrage business. Then you get to write off your workshop, your work van, your bike rides, your trips to Vicenza, etc...



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.

This for sure, Dan as much as you buy, sell and review bike related items, you could ezaly have a business. You just have to think of ways to keep it simple.

.

[buddybikes]

Note to youngsters, marry a CPA. All I do is get turbotax to work on my computer and its here game.

[unterhausen]

I'm trying to understand how OP got hosed. We have had a couple of years when we didn't withhold enough, it happens. Then you pay the taxes later.

I was grumpy a couple of years ago because USAA decided to get out of mutual funds and the people they turned the business over to sold everything and we had capital gains tax for no benefit to us. I don't think we had any way to offset the gains either.

[dsimon]

Yea I owed more than anticipated but a wise person told me I must be doing okay if I owe money...... I like to say I owe my "uncle" this time of year makes me feel better that way. and Im a company man

[bigbill]

Originally Posted by unterhausen

I'm trying to understand how OP got hosed. We have had a couple of years when we didn't withhold enough, it happens. Then you pay the taxes later.

I was grumpy a couple of years ago because USAA decided to get out of mutual funds and the people they turned the business over to sold everything and we had capital gains tax for no benefit to us. I don't think we had any way to offset the gains either.

I had an IRA with USAA that was meh. Then they turned their IRAs over to Schwab and it's been a great experience. I actually feel better about how it is managed and even with the ups and downs this month, I've done well. When I retired from my last job, I rolled the 401 over to my IRA. In November, I am 59.5 years old.

[MikeD]

I'm going to have to pay tax on Social Security soon since I'm going to have to claim my benefits this year. It's double taxation since I paid into it in my working career with after tax money. At least California doesn't tax the benefits.

[mdeth1313]

Originally Posted by rounder

It did not happen this year, but a few years ago there was an adjustment made to my Federal return which resulted in a corresponding adjustment to my Maryland state return. I received a letter from the state showing that I owed an additional $350 (or so) on my return for that year. I mailed them a check and they credited my return for that year. But the state then snatched the same amount from my current year refund, even though the amount had been already paid. I called the state twice and spoke to agents who both told me that they could see the return was overpaid and I would receive my money, but nothing happened. I then sent a package of the return with all of the attachments to the state and requested a refund. I never from them. It was only $350 but I will never say anything good to anyone about the state's tax department.

I had an issue way back when living in NY and working in NJ. Fed & NY taxes were fine, but NJ lost my w2 and kept telling me I owed some crazy amount. Our accountant kept resending, but it seemed to go into a black hole. After the 3rd notice by mail (w/ penalties accruing) and several phone calls where I was told there was no other way to fix it, I reached out to a NJ legislator's office in the district where I worked. I shared the info with them, they contacted the state and I had my refund 2 weeks later.

You might want to try your state reps.

[rounder]

Glad you got your money. I will try something different.

[reuben]

Originally Posted by KarlC

This for sure, Dan as much as you buy, sell and review bike related items, you could ezaly have a business. You just have to think of ways to keep it simple.

.

The downside is that with the volume he goes through they might think he's laundering money.