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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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why do I keep owing both federal and state taxes every year

Customer Question

why do I keep owing both federal and state taxes every year even after I dropped my expemtions and I make the same amount of money?
Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.

Your withholding is based on how you file W-4 form -

If you are single, do not have any dependents, standard deduction, no additional credits or deduction - generally - you should file as Single with two allowances.

 

If you provide your gross income - I will help estimate your tax liability and withholding.

 

 

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22702
Experience: Taxes, Immigration, Labor Relations
Lev and 6 other Tax Specialists are ready to help you
Customer: replied 5 years ago.

2006 - Gross Income $16,333; I owed Federal $57, State $18; 2 expemptions (not sure)

 

2007 - Gross Income $16194; I owed Federal $401, State 227 ; 3 exemptions

These taxes were paid through The Stimulus Package (Thank GOD!)

 

2008 Gross : $18612.16; Federal $691!! State $457; 2 Exemptions

 

all years I filed single, no dependents, no special credits deductions, etc.

 

I've since dropped down to 1exemption... I'm also paying monthly for backtaxes for '96 that accrued 10yr penalty fees because one of w2 was not attached to my taxes that year and the IRS filed them for me. I only found that out 10yrs later when my bankruptcy attorney told me this was outstanding in '05-06. What can I do? I'm also paying back student loans.

 

 

Expert:  Lev replied 5 years ago.

2006

adjusted gross income $16,333

taxable income $16,333-$5150-$3300=$7883

tax liability $805

If you filed W-4 as Single with 2 allowances (that is correct filing) - your withholding should be $708 and would owe ~$100

 

2007

adjusted gross income $16,194

taxable income $16,194-$5350-$3400=$7444

tax liability $744

If you filed W-4 as Single with 3 allowances (that is incorrect filing) - your withholding should be $334 and would owe ~$400

You should be filing 2 allowances - your withholding should be $674 and would owe ~$70

 

2008

adjusted gross income $18,612

taxable income $18,612-$5450-$3500=$9662

tax liability $1048

If you filed W-4 as Single with 2 allowances (that is correct filing) - your withholding should be $962 and would owe ~$100

It is possible that you (or your payroll person) changed withholding not at the beginning of the year - and that resulted large net liability - that should be investigated to identify the real reason.

 

2009 - estimated

adjusted gross income $18,612 - assumed

taxable income $18,612-$5700-$3650=$9262

tax liability $972

If you filed W-4 as Single with 2 allowances (that is correct filing) - your withholding should be $459 - you should claim a new for 2009 payroll tax credit up to $400 per person - and would owe ~$100

If you do not want to owe - following are options:

-- on W-4 form mark additional withholding - for instance $5 per paycheck

-- you may also put 1 allowance instead of two - that will resulted in $1006 withholding and you will be getting a credit ~$400.

Please be aware as any changes will be done not at the beginning of the year - their affects should be prorated.

 

If you are paying student loan - you should receive a form 1099-E - http://www.irs.gov/pub/irs-pdf/f1098e.pdf - that reports the interest you paid - that is deductible on your tax return.

If you have outstanding tax debt - I suggest to set installment agreement with the IRS.

 

Let me know if you need any help.

 

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