Tax mistake!

[[email protected]]

I did my taxes tonight.
I use turbotax. It's cheap n easy just like me.
After hitting the button acknowledging that once it transmit I cannot alter my return, I started to clean up.

I found a 1099 from a gas company (OGM royalties on my huge 1.3 acre plot (sarcasm )). 2015 was the my first year for this. I forgot all about it!

Guess I will be filing an amended return for the first time.



Sent from my SM-G900V using Tapatalk

 

[Traumahawk]

I had to do an amended return 2 years ago. I work in a state different than where I live.....and got mixed up. The amended return took about 15 mins.

 

[caseyjones955]

Amend to include it, I have 1099 as well, a quick amendment should keep you square. Dont procrastinate on this one. I gave up and hired a pro (real pro, not H&R Block) which turns out to be a wise move for a borderline tax revoltist like myself. Besides I would have left $ on the table, nice to have someone savvy with self-employed individuals.

 

[tothemax93]

Any paper work makes me glaze over. I can waste an evening filling out DMV forms. I had to fill out a form for New York state, about workers comp. I filled it out, they sent it back 3x telling me i was filling it out wrong. I have the ability to take a seemingly simple question, and find three different angles to answer it. I'm a seasonal construction worker, so i depend on my tax return to help carry me through. I can't afford any mistakes. It cost me (accountant) $120 bucks for complete peace of mind, and I got my return back in 8 days. I really have no doubt that I get a better return using an accountant. My accountant is in a firm, so they play by the rules. He has the ability to plug in the numbers in different ways to get the best return. Your life situation also plays a big part though, in what's the best way for you. I've always wanted to try a "simple" tax program like intuit, to see what the difference is, if any, with the way I do it.

 

[Tex85]

Personally my wife is a CPA so I know next to nothing about taxes. She keeps everything in top shape year to year tax wise and I keep every bit of technology in the house humming along. Works great that way!

 

[caseyjones955]

When I fill out my taxes I fume and rage, it would be to easy to get myself into trouble. That being said if you have a simple 1040 and no real deductions intuit might be ok but a one time consultation with a CPA is still a good idea. Once you pass a an income threshold you can learn about shelters, loopholes and deductions Intuit and H&R Block type places seem all to quick to ignore or dont know any hing about. Anyone with a few irons in the fire or retirement accounts may bennifit from a REAL pro. Or at least a one time consultation to critique your normal filing strategy.

 

[tothemax93]

When I fill out my taxes I fume and rage, it would be to easy to get myself into trouble.

A little off topic, but I have no doubt that if Joe citizen got his total earnings, and had to pay taxes out of his pockets, the Government would almost immediately implode.

 

[Traumahawk]

I will tell you one thing that I found shocking. I made less income last year, than the year before. About 30% less, and my refund wound up being about 60% more. I immediately got pissed, that means that in this country, you get penalized for working harder, and making more money.

 

[blaxmax]

^ It's always been that way.
I worked for an oil company for 12 years in West Texas, walked up to the boss and said 'time for a raise'.
I got it-put me in a higher tax bracket and brought home less money weekly.

 

[[email protected]]

I will tell you one thing that I found shocking. I made less income last year, than the year before. About 30% less, and my refund wound up being about 60% more. I immediately got pissed, that means that in this country, you get penalized for working harder, and making more money.

The more you make the more they take!

I'm in the opposite position as you. I got a 25% raise last year.
Odd thing is, my net paycheck increase was only around 9% and my refund is around 27% less than last year.

The other thing that irritates me is that when I put in my wife's W-2 my refund drops around $1,000. She only made 10K last year. It cost me $1K for her to make 10.

Subtract the 1K loss, her taxes, fuel and maintenance to travel to work and we are almost better off with her staying at home vs, having a PT job.

 

[Redbone]

Jumping to the next tax bracket is always a shock. I once went from about $32k a year to $45k and expecting to have a fat new paycheck only to be disappointed with what it actually was.

 

[caseyjones955]

On tax brackets, i took a fair hourly and worked less hours which was necessary for medical reasons. I work 2-3 days/week when I W2 it up, but when I 1099 as now Its 7-9 days a month but I provide 24 hour care for a client. I keep my tax bracket down and have time for other ventures that are non-taxable. 1099 and self-employed pay more than W2 employees for various reasons, if you are well off you are almost certainly paying more than your fair share unless you have a REAL pro guiding you. Im middle class at best which if fine for the hours im physically able to work but guidance has been priceless anyway.

I learned something from my mentor I will try to paraphrase here regarding withholding and returns. If you have to much withheld the IRS is investing that capitol and making it work for them, if you adjust your witholding to closely match what you will need to pay then you keep that difference and make it work for you instead. Your return will be very minimal but you kept the difference all along for your own portfolio, withholding only marginally more then your projected owing. If you have no investments than at least you prevent the IRS from getting richer while leeching off you. My income is so variable that this is hard for me but for most this would be an excellent thing to discuss with the accountant you should have. Having to little withheld which is a major dont. Im just as interested in limiting what the IRS can take as I am in bringing home maximum income. I once declined a $3/hr raise as it would have been a pay cut after the IRS got done pounding me. There are stipends and other creative and legal ways to take extra income while staying in a lower bracket instead which is handled differently state to state so getting pro guidance is really a grand idea and in my experience will usually pay for itself several times fold. I can usually negotiate valuable perks that legally fall outside taxable income, many careers have room for this so I found someone that works with healthcare workers. Find a pro that has experience with clients in your field. when I negotiate a new client, contract or position I keep this in the forefront of my mind and check with my guy to see how it will effect my overall picture. When I finally found a real pro he ended up amending several past years handled by Intuit and H&R and found thousands of dollars left on the table. In.searching for a pro I made many calls but ended up using a guy my lawyer recommend. The market is saturated by mediocrity in regards to financial guidance and tax help.

 

[jfeagins]

Enough with this "next tax bracket cost me more $$$" BS! Understanding of tax brackets, and how the tax owed (end of year) is crucial to ending this myth.

There is never a case of where IF you make an extra dollar, or two, and that the extra dollar or two puts you into the "next tax bracket", that it will cost you more than what you are making extra with that next dollar. PERIOD. Doesn't happen. BECAUSE, upon reaching that "next tax bracket", each previous dollar made (before getting to the next higher bracket) will always be taxed at the lower bracket rate. The only dollars you make to be taxed at the higher bracket rate, are those dollars you earn which are above the bracket cutoff.

For instance (super simplified):

you make
$10000 tax bracket is 15%, your total tax will be $1500.

Next year you make
$10025, tax bracket is now 30%, your total tax will be $1507.50.
Because the first $10K is always going to be taxed at the lower 15% bracket rate, no matter how much more than $10K you make. The next $25 will be taxed at the higher rate, until you reach yet another higher bracket etc.....


...........................If you are on Medicare, that may be another whole thing....................

 

[jfeagins]

Chances are GOOD, that if you ever have an incidence in which your raise caused you to take home less per week, is that your employers' payroll system has simply miscalculated what it thinks you may owe at the end of the year, and has misadjusted your withholdings. However, at year end, when filing your actual 1040, you will only be taxed as per my illustration above, and you should get a bit more back accordingly. IF NOT, someone either is currently mishandling your 1040, or they have mishandled it in previous years. OR there are other circumstances that have affected your tax return. It's simple math,..............give or take a couple hundred thousand lines of small print in the tax code.

 

[jfeagins]

Shala & I made slightly more in 2015 than the previous year. However, our Fed/State refund went down SIGNIFICANTLY for 2015. I was shocked at how much different the two refunds were. But after closer examination, I found that nearly 100% of our variance was due to new payroll software Shala's employer implemented mid-year. Some how, during it's implementation, they got her withholdings rate entered incorrectly. She had it set prior to "Married, but withhold at the higher single rate". But when they changed software, they reset her withholding rate at the "Married" status only, which resulted in her take home pay being increased throughout the year, and since her pay is auto-deposit, she didn't notice the huge mid-year "pay increase" their software had given her. Now we just won't be getting as much of a refund this year.

 

[caseyjones955]

Enough with this "next tax bracket cost me more $$$" BS! Understanding of tax brackets, and how the tax owed (end of year) is crucial to ending this myth.

There is never a case of where IF you make an extra dollar, or two, and that the extra dollar or two puts you into the "next tax bracket", that it will cost you more than what you are making extra with that next dollar. PERIOD. Doesn't happen. BECAUSE, upon reaching that "next tax bracket", each previous dollar made (before getting to the next higher bracket) will always be taxed at the lower bracket rate. The only dollars you make to be taxed at the higher bracket rate, are those dollars you earn which are above the bracket cutoff.

For instance (super simplified):

you make
$10000 tax bracket is 15%, your total tax will be $1500.

Next year you make
$10025, tax bracket is now 30%, your total tax will be $1507.50.
Because the first $10K is always going to be taxed at the lower 15% bracket rate, no matter how much more than $10K you make. The next $25 will be taxed at the higher rate, until you reach yet another higher bracket etc.....


...........................If you are on Medicare, that may be another whole thing....................

I have nothing to gain by BSing anyone. What you said about brackets does ring a bell but all things considered it was a slight loss to take a higher hourly. There are factors I dont fully understand which is why I get help and always reccomend it to others who are not savvy this way. When I get home next week I'll look and see if I cant identify the factor/s. I was much further to take a travel/food/expense stipend that did not count as taxable income hence did not alter my bracket.

Im glad you made this point and I hope to be corrected if I present misinformation which would never be intentional. Calling BS instead of simply offering better information implies misinformation was intentionally presented. I am choosing not to interpret it this way and instead will just thank you for clarification. It is my true desire to see everyone successfully and legally negotiate taxes w/o getting leaned over to far. I cant read hours and hours of ever changing tax code so for me it was best to get a pro familiar with my field of work.

When I get info from my mentor or anywhere else, I use that to formulate questions for my guy ( like not giving the IRS free loans via excessive withholding) rather than acting on it without guidance. Taxes are complex by design and that makes it far to likely for Average Joe to overpay, or get into trouble trying to be savvy. The IRS is NOT your friend.

 

[Traumahawk]

Does the amount of hours that you work also figure into it? I have worked over time....and I seem to take home less? And I mean substantial overtime....40 hrs or more.

 

[jfeagins]

Does the amount of hours that you work also figure into it? I have worked over time....and I seem to take home less? And I mean substantial overtime....40 hrs or more.

Bottom line for you would be that your employer's software is taking your current OT weekly income, and trying to stretch it out to be your 'normal' take home (which would be substantially higher at year end, if the OT hour thing went all year), and making a miscalculation based off that. Software can only do so much to guestimate what you may end up owing.

As far as me saying the "BS" word here.....I mean that in no disrespectful way whatsoever. I simply mean that what I heard is not the truth. I do not mean to imply that it was an intentional mistruth. Sorry if I offended you Caseyjones.

(I throw that word/phrase around a lot - lot more than I should) :doh:

 

[blaxmax]

Enough with this "next tax bracket cost me more $$$" BS! Understanding of tax brackets, and how the tax owed (end of year) is crucial to ending this myth.

There is never a case of where IF you make an extra dollar, or two, and that the extra dollar or two puts you into the "next tax bracket", that it will cost you more than what you are making extra with that next dollar. PERIOD. Doesn't happen. BECAUSE, upon reaching that "next tax bracket", each previous dollar made (before getting to the next higher bracket) will always be taxed at the lower bracket rate. The only dollars you make to be taxed at the higher bracket rate, are those dollars you earn which are above the bracket cutoff.

For instance (super simplified):

you make
$10000 tax bracket is 15%, your total tax will be $1500.

Next year you make
$10025, tax bracket is now 30%, your total tax will be $1507.50.
Because the first $10K is always going to be taxed at the lower 15% bracket rate, no matter how much more than $10K you make. The next $25 will be taxed at the higher rate, until you reach yet another higher bracket etc.....


...........................If you are on Medicare, that may be another whole thing....................

Also 40 years later the value of a dollar is NOT the same. What I paid in taxes YEARS AGO is NOT the same as or IF I get anything back.
I had a mother and 2 sisters certified cpa's that would tell you different.
I will be lucky if I get ANY of what I paid in over the last 40+ years as it is going to run out by the time I retire anyway so WTF.
"F" medicare- I wouldn't go to a doctor or take a pill if my life depended on it!!!
The ONLY time I've ever been inside a hospital was when I was born and 1 motorcycle accident from a drunk driver. I walked out at 4am the next morning after pulling IV's and catheters out of myself. Being chased by the staff. NEVER been to dr. in my life- I do my own dental work if I need it with dremel and clove oil.

 

[caseyjones955]

As far as me saying the "BS" word here.....I mean that in no disrespectful way whatsoever. I simply mean that what I heard is not the truth. I do not mean to imply that it was an intentional mistruth. Sorry if I offended you Caseyjones.

(I throw that word/phrase around a lot - lot more than I should) :doh:

None taken, we're good of course! It's hard to draw connotation or inflection from print sometimes so thank you for clarifying. I would not feel good about relaying erroneous info so I'm glad you came in with an accurate version. Its best for readers and what makes forums so useful. Rather than getting offended I'll buy you a beer at the ralley. ( i cant do it w/ my phone but assume the smileys toasting beer mugs here).