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I know I am going to owe $3500 in fereral tax for 2013 unless

I come up with some...
I know I am going to owe $3500 in fereral tax for 2013 unless I come up with some kind of deduction. Is there something I can do to offset this?
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Answered in 1 minute by:
10/24/2013
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,220
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane :

Hi,

Lane :

If you can tell me something about your situation, I can probably help ... For example ,if this is from contractor pay, there are a lot of things that can be legitimately deducted

Lane :

There may also be personal items that are deductible

Lane :

Again, depending on your situation, you can set up your own retirement plan, contribute money to that, KEEP the money, but the deduct the amount of the contribution from your taxable income

Lane :

And there are more ... but it ALL turns on HOW the money was earned AND your specific situation ... and finally, what CREATED this tax ... if this is some sort of tax penalty or assessment, there may be ways to spread out the payments

Lane :

But again, I just have to know more, to be able to help

Lane :

Please let me know more ;;; for ow, here's is a pretty long list of itemized deductions:

Lane :

When you click on this link, please note that EACH IRS topic number is XXXXX link that has it's OWN very long list: http://www.irs.gov/taxtopics/tc500.html

Lane :

I hope this helps

Lane :

But again, if you'll let me know more about your situation, there may be other things as well

Lane :

I still don't see you coming into the chat session, so I'll move us to the "Q&A" mode. … Maybe that will help … (We can still continue a dialogue there, just not in real-time chat, as we can here)


Please let me know if you have any questions at all ...


Lane

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Hi Dwight,

... just checking back in HERE, (I never did see you come back into the chat).

Again, if you can give me some details, I can help

Let me know,

Lane
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Customer reply replied 4 years ago

Taxable wages = 110713


Fed Withholding = 17544


State Withholding = 6007


Social security benefits = 31721


Oil Income = 1161


Other Income = 3800


We rent. Only deduction would be to church for 4800



Hi Dwight,

I know this doesn't change what you actually OWE, but you can certainly do additional withholding through the W-4 at work.

Notice that on the W-4 here (the form you can get from your company's HR department (they must allow you to change, by law): Form W-4

It says on line 6: "Additional amount, if any, you want withheld from each paycheck..."

THis may help take the bite out of having to pay it all at once in April.




Another way to do the same thing... you can also send in additional estimated payments through the voucher called 1040-ES: Form 1040-ES There are all sort of worksheets in the instructions, but since you already know the amount you'll still owe, this fives you a more flexible way to send it in (in any amount, and whenever, you want)

Just simply fill in the little 1/2 page voucher, and send to the adress you see in the instructions, for your state.




Other ideas would be to contribute more to your company 401(k), again, the ONLY way to get a deduction without actually giving away, or spending, money.

Also, here's an excellent article about how to deduct a portion of your home (even when you rent) if you have (or could start this year) a home based business: http://homeguides.sfgate.com/can-deduct-rent-paid-apartment-1867.html

And just in case there may be some deductions you hadn't thought about, here are really good memory jogger: http://homeguides.sfgate.com/can-deduct-rent-paid-apartment-1867.html



And finally, if you'd like to tell me your filing status, whether there are dependants, age and other things neede to run an actual projection of taxes, I can do that for you just to see if I can see anything.



Hope this helps

Lane

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

 

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Customer reply replied 4 years ago

Concerning Projection of taxes;


Filing jointly


just my wife (66) & myself (68)


Have paid in $3887 to traditional IRA contribution


Other than what I stated before, that's about it.


 


OK, just trying to see if there's anything at all...

The only thing we can find here is (1) to make higher contributions to qualified retirement plans, (3) have more withheld on your W-2 (or use the estimated voucher to do THAT a different way) ... or (3) use home office deduction and other business expenses to reduce wherever the other income is coming from.

It may be that the least painful way would be to have an additional 350 or so withheld weekly (adjust, depending on how often you're paid) using line 6 on the W-4 form they can provide for you for you at work - or you can print out the one I've provided above and take it in.

Hopefully you'll rate my answer based on it's thoroughness and accuracy (rather than on any good news/bad news content) ... My hope is that having all the facts will help you "see around some corners."


And again, if there are other aspects of this you'd like to discuss, I'll be here.

Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,220
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
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Customer reply replied 4 years ago

If I want to make sure this does not happen next year, wouldn't I want to increase my line 6 withholding by $135)? ($3500 / 26 ). Not sure why you would say $350 per week?



For the whole year, yes

I was calculating that there would be 10 week;y pay periods for THIS year.

Lane
Ask Your Own Tax Question
Customer reply replied 4 years ago


So, if I put $700 into my retirement account each pay period (bi-weekly), will this be 100% applied against what I owe in taxes? In other words, would I then owe 0 taxes?


If you're you're talking about a full year here, that would be 18,200 (working for you in that 401(k))

That reduces income by 18200 ... and at the 25% bracket, that would be a tax benefit of 4550.

Yep that does it.

All other things being equal (if the tax still owed is 3500) that that would actually generate a 1000 refund.

Lane
Ask Your Own Tax Question
Customer reply replied 4 years ago

I was just talking about for the rest of this year ( 5 pay periods). If I paid the $700 into my retirement, what would my tax be at the end of the year?

OK, sorry.

5 x 700 = 3500 (Please don't shoot the messenger here, but no)

It DOES reduce your TAXABLE INCOME by 3500...

... which means that, (at your tax bracket of 25%), you won't be paying tax on that 3500, so it reduces your taxes by (3500 x 25% =) $875.



Only tax CREDITS (like the child care credit or the education tax credit or the Foreign tax paid tax credit) reduce your tax bill dollar for dollar.

Everything else is DEDUCTIONS, (a deduction from your income for purposes of calculating your tax)

Tax CREDITs you multiply by 100% to get the tax effect. Deductions from income, however, you must multiply by your top - or marginal - tax rate (the rate that would have been charged against that next dollar of income).




NOW, I DO think that it should be pointed out that when you put money in a 401(k) or other pre-tax retirement plan the ACUTAL benefit is more than just the tax benefit.

WHY? .. because for ALL other DEDUCTIONs, you have to SPEND $1.00 to get a tax benefit of 25 cents.

With the tax deduction for retirement plan savings, you get the deduction .. but the money you used to get that deduction stays yours!




But, yes, TAX DEDUCTIONS are just deductions against your income, for purposes of figuring your taxes. So the TAX BENEFIT is whatever that next dollar would have been taxed at ... which in your case is 25%.

For those married filing jointly in 2013 taxable income between $72,500 to $146,400 is taxed at 25% ... so you're squarely in the 25% marginal bracket.



Lane


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Customer reply replied 4 years ago

Ok, thanks for all your expertise!


You're very welcome!

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better (excellent, is ideal)… That's the only way they will pay us here.

HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.


Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,220
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified
Lane and 87 other Tax Specialists are ready to help you
Ask your own question now

Thank you so much for the rating!

If you'd like to work with ME again just say "For Lane only," at the beginning of your next question


OR set me up as your preferred expert on your home page.


Regardless, thanks again,

Lane

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Customer reply replied 4 years ago

Cannot seem to find where to set you up as a preferred expert? Is it on the "My Account" screen?


Gosh I wish I knew what it looked like.

I just know that the moderators tell us that you do it on your "HOME SCREEN"nd.

If you ask customer service, Ill bet they can tell you.

The experts here are just contractors and aren't really privy to a lot of what it looks like on YOUR end.

Thank you so much for the consideration .. I would send an email to customer service OR give them a call

And if that's not doable ... saying "For Lane Only," at the beginning of another question works pretty well too.

Thanks again!

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Ask Lane Your Own Question
Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,220
13,220 Satisfied Customers
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986

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