Possible issue with my W4 and tax return
After I graduated high school I grabbed a minimum wage job ($10) and only worked for 3-4 months before the year ended. I ended up getting $440 back through federal and state tax refund. Then for the entire next year I worked minimum wage at a different job (still $10) with better future prospects and my boss gave me a $2 raise (now $12) in November if I remember correctly.
I'd been looking forward to my tax return because if working 3-4 months netted me almost $450 on my tax return then I should probably expect 3-4x more than that on this years tax return since I worked the whole year. Well long story short, I'm filing my taxes through TurboTax and it looks like federal and state combined is only giving me $200. I'm pissed and I'm no tax expert and I'm not sure where to ask this but I'm wondering if my raise at the end of the year is causing TurboTax to miscalculate how much money I owe in taxes and therefore miscalculate how much I should be getting back?
No matter how I look at it I don't understand how I worked 3-4x as much as the previous year and paid 3-4x times more in taxes and am only receiving half as much on my tax return.
united-states income-tax
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After I graduated high school I grabbed a minimum wage job ($10) and only worked for 3-4 months before the year ended. I ended up getting $440 back through federal and state tax refund. Then for the entire next year I worked minimum wage at a different job (still $10) with better future prospects and my boss gave me a $2 raise (now $12) in November if I remember correctly.
I'd been looking forward to my tax return because if working 3-4 months netted me almost $450 on my tax return then I should probably expect 3-4x more than that on this years tax return since I worked the whole year. Well long story short, I'm filing my taxes through TurboTax and it looks like federal and state combined is only giving me $200. I'm pissed and I'm no tax expert and I'm not sure where to ask this but I'm wondering if my raise at the end of the year is causing TurboTax to miscalculate how much money I owe in taxes and therefore miscalculate how much I should be getting back?
No matter how I look at it I don't understand how I worked 3-4x as much as the previous year and paid 3-4x times more in taxes and am only receiving half as much on my tax return.
united-states income-tax
New contributor
add a comment |
After I graduated high school I grabbed a minimum wage job ($10) and only worked for 3-4 months before the year ended. I ended up getting $440 back through federal and state tax refund. Then for the entire next year I worked minimum wage at a different job (still $10) with better future prospects and my boss gave me a $2 raise (now $12) in November if I remember correctly.
I'd been looking forward to my tax return because if working 3-4 months netted me almost $450 on my tax return then I should probably expect 3-4x more than that on this years tax return since I worked the whole year. Well long story short, I'm filing my taxes through TurboTax and it looks like federal and state combined is only giving me $200. I'm pissed and I'm no tax expert and I'm not sure where to ask this but I'm wondering if my raise at the end of the year is causing TurboTax to miscalculate how much money I owe in taxes and therefore miscalculate how much I should be getting back?
No matter how I look at it I don't understand how I worked 3-4x as much as the previous year and paid 3-4x times more in taxes and am only receiving half as much on my tax return.
united-states income-tax
New contributor
After I graduated high school I grabbed a minimum wage job ($10) and only worked for 3-4 months before the year ended. I ended up getting $440 back through federal and state tax refund. Then for the entire next year I worked minimum wage at a different job (still $10) with better future prospects and my boss gave me a $2 raise (now $12) in November if I remember correctly.
I'd been looking forward to my tax return because if working 3-4 months netted me almost $450 on my tax return then I should probably expect 3-4x more than that on this years tax return since I worked the whole year. Well long story short, I'm filing my taxes through TurboTax and it looks like federal and state combined is only giving me $200. I'm pissed and I'm no tax expert and I'm not sure where to ask this but I'm wondering if my raise at the end of the year is causing TurboTax to miscalculate how much money I owe in taxes and therefore miscalculate how much I should be getting back?
No matter how I look at it I don't understand how I worked 3-4x as much as the previous year and paid 3-4x times more in taxes and am only receiving half as much on my tax return.
united-states income-tax
united-states income-tax
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New contributor
edited 1 hour ago
JoeTaxpayer♦
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144k22229463
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asked 3 hours ago
SemperAmbroscusSemperAmbroscus
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2 Answers
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You're receiving less back because the withholding calculations were more accurate.
If you hadn't received a raise, you would probably have gotten $0 back at filing time.
Because the US income tax isn't a flat percentage, but is progressive, the taxes owed during any paycheck require knowing your income for the rest of the year in order to figure out what bracket you're in, which together with your deductions, determine your effective tax rate. The rules for withholding are quite complicated, but an approximation that's good enough for our purposes is: "Assume you earn at the same rate for all 52 weeks, calculate the total income tax owed during the year, divide it back out by 52 weeks".
When you only worked 3-ish months, that rule overguessed your total tax bill and therefore took out too much from each check. And you got the extra back at the end of the year, after Uncle Sam got to use it all year, without paying you any interest (yes, refunds are bad for the taxpayer!)
When you worked all year, withholding for the first 10 months was based on a full year of $10/hr (which slightly underestimated your actual tax due after figuring in the raise) and for the last 2 months was based on a full year of $12/hr (which overestimated your actual tax, because you didn't earn at that rate all year).
And assuming you correctly typed in the numbers from your W-2, TurboTax knows exactly how much you owe in taxes, because it knows your exact income, and the exact amount you already paid. None of the withholding calculations during the year "knew" either how much you owed or how much you already paid, even the last paycheck of the year where all the information was available (because doing the accurate calculation wouldn't by allowed by the IRS)
By earning all year and at a higher rate, you had a higher effective tax rate. No, it's not fair. It's progressive.
add a comment |
The calculation may very well be correct, because income taxes (federal and some states) are progressive, not flat. Your refund depends on your tax withholdings in relation to what you actually turn out to owe. For 2017, your total income was low enough that your tax owed was probably zero (the first ~$10k of income is excluded for singles), so you received all your withholdings back. For 2018, because you worked the whole year, your withholdings came close to matching your total tax owed (as they're designed to), so your refund is small.
If your W-2 is correct, the information you entered in TurboTax already properly accounts for your annual totals including the effect of the raise late in the year.
If you're lucky enough to earn more money over time, you'll have the privilege of paying higher and higher tax rates.
add a comment |
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2 Answers
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2 Answers
2
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oldest
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active
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You're receiving less back because the withholding calculations were more accurate.
If you hadn't received a raise, you would probably have gotten $0 back at filing time.
Because the US income tax isn't a flat percentage, but is progressive, the taxes owed during any paycheck require knowing your income for the rest of the year in order to figure out what bracket you're in, which together with your deductions, determine your effective tax rate. The rules for withholding are quite complicated, but an approximation that's good enough for our purposes is: "Assume you earn at the same rate for all 52 weeks, calculate the total income tax owed during the year, divide it back out by 52 weeks".
When you only worked 3-ish months, that rule overguessed your total tax bill and therefore took out too much from each check. And you got the extra back at the end of the year, after Uncle Sam got to use it all year, without paying you any interest (yes, refunds are bad for the taxpayer!)
When you worked all year, withholding for the first 10 months was based on a full year of $10/hr (which slightly underestimated your actual tax due after figuring in the raise) and for the last 2 months was based on a full year of $12/hr (which overestimated your actual tax, because you didn't earn at that rate all year).
And assuming you correctly typed in the numbers from your W-2, TurboTax knows exactly how much you owe in taxes, because it knows your exact income, and the exact amount you already paid. None of the withholding calculations during the year "knew" either how much you owed or how much you already paid, even the last paycheck of the year where all the information was available (because doing the accurate calculation wouldn't by allowed by the IRS)
By earning all year and at a higher rate, you had a higher effective tax rate. No, it's not fair. It's progressive.
add a comment |
You're receiving less back because the withholding calculations were more accurate.
If you hadn't received a raise, you would probably have gotten $0 back at filing time.
Because the US income tax isn't a flat percentage, but is progressive, the taxes owed during any paycheck require knowing your income for the rest of the year in order to figure out what bracket you're in, which together with your deductions, determine your effective tax rate. The rules for withholding are quite complicated, but an approximation that's good enough for our purposes is: "Assume you earn at the same rate for all 52 weeks, calculate the total income tax owed during the year, divide it back out by 52 weeks".
When you only worked 3-ish months, that rule overguessed your total tax bill and therefore took out too much from each check. And you got the extra back at the end of the year, after Uncle Sam got to use it all year, without paying you any interest (yes, refunds are bad for the taxpayer!)
When you worked all year, withholding for the first 10 months was based on a full year of $10/hr (which slightly underestimated your actual tax due after figuring in the raise) and for the last 2 months was based on a full year of $12/hr (which overestimated your actual tax, because you didn't earn at that rate all year).
And assuming you correctly typed in the numbers from your W-2, TurboTax knows exactly how much you owe in taxes, because it knows your exact income, and the exact amount you already paid. None of the withholding calculations during the year "knew" either how much you owed or how much you already paid, even the last paycheck of the year where all the information was available (because doing the accurate calculation wouldn't by allowed by the IRS)
By earning all year and at a higher rate, you had a higher effective tax rate. No, it's not fair. It's progressive.
add a comment |
You're receiving less back because the withholding calculations were more accurate.
If you hadn't received a raise, you would probably have gotten $0 back at filing time.
Because the US income tax isn't a flat percentage, but is progressive, the taxes owed during any paycheck require knowing your income for the rest of the year in order to figure out what bracket you're in, which together with your deductions, determine your effective tax rate. The rules for withholding are quite complicated, but an approximation that's good enough for our purposes is: "Assume you earn at the same rate for all 52 weeks, calculate the total income tax owed during the year, divide it back out by 52 weeks".
When you only worked 3-ish months, that rule overguessed your total tax bill and therefore took out too much from each check. And you got the extra back at the end of the year, after Uncle Sam got to use it all year, without paying you any interest (yes, refunds are bad for the taxpayer!)
When you worked all year, withholding for the first 10 months was based on a full year of $10/hr (which slightly underestimated your actual tax due after figuring in the raise) and for the last 2 months was based on a full year of $12/hr (which overestimated your actual tax, because you didn't earn at that rate all year).
And assuming you correctly typed in the numbers from your W-2, TurboTax knows exactly how much you owe in taxes, because it knows your exact income, and the exact amount you already paid. None of the withholding calculations during the year "knew" either how much you owed or how much you already paid, even the last paycheck of the year where all the information was available (because doing the accurate calculation wouldn't by allowed by the IRS)
By earning all year and at a higher rate, you had a higher effective tax rate. No, it's not fair. It's progressive.
You're receiving less back because the withholding calculations were more accurate.
If you hadn't received a raise, you would probably have gotten $0 back at filing time.
Because the US income tax isn't a flat percentage, but is progressive, the taxes owed during any paycheck require knowing your income for the rest of the year in order to figure out what bracket you're in, which together with your deductions, determine your effective tax rate. The rules for withholding are quite complicated, but an approximation that's good enough for our purposes is: "Assume you earn at the same rate for all 52 weeks, calculate the total income tax owed during the year, divide it back out by 52 weeks".
When you only worked 3-ish months, that rule overguessed your total tax bill and therefore took out too much from each check. And you got the extra back at the end of the year, after Uncle Sam got to use it all year, without paying you any interest (yes, refunds are bad for the taxpayer!)
When you worked all year, withholding for the first 10 months was based on a full year of $10/hr (which slightly underestimated your actual tax due after figuring in the raise) and for the last 2 months was based on a full year of $12/hr (which overestimated your actual tax, because you didn't earn at that rate all year).
And assuming you correctly typed in the numbers from your W-2, TurboTax knows exactly how much you owe in taxes, because it knows your exact income, and the exact amount you already paid. None of the withholding calculations during the year "knew" either how much you owed or how much you already paid, even the last paycheck of the year where all the information was available (because doing the accurate calculation wouldn't by allowed by the IRS)
By earning all year and at a higher rate, you had a higher effective tax rate. No, it's not fair. It's progressive.
edited 2 hours ago
answered 2 hours ago
Ben VoigtBen Voigt
2,0171115
2,0171115
add a comment |
add a comment |
The calculation may very well be correct, because income taxes (federal and some states) are progressive, not flat. Your refund depends on your tax withholdings in relation to what you actually turn out to owe. For 2017, your total income was low enough that your tax owed was probably zero (the first ~$10k of income is excluded for singles), so you received all your withholdings back. For 2018, because you worked the whole year, your withholdings came close to matching your total tax owed (as they're designed to), so your refund is small.
If your W-2 is correct, the information you entered in TurboTax already properly accounts for your annual totals including the effect of the raise late in the year.
If you're lucky enough to earn more money over time, you'll have the privilege of paying higher and higher tax rates.
add a comment |
The calculation may very well be correct, because income taxes (federal and some states) are progressive, not flat. Your refund depends on your tax withholdings in relation to what you actually turn out to owe. For 2017, your total income was low enough that your tax owed was probably zero (the first ~$10k of income is excluded for singles), so you received all your withholdings back. For 2018, because you worked the whole year, your withholdings came close to matching your total tax owed (as they're designed to), so your refund is small.
If your W-2 is correct, the information you entered in TurboTax already properly accounts for your annual totals including the effect of the raise late in the year.
If you're lucky enough to earn more money over time, you'll have the privilege of paying higher and higher tax rates.
add a comment |
The calculation may very well be correct, because income taxes (federal and some states) are progressive, not flat. Your refund depends on your tax withholdings in relation to what you actually turn out to owe. For 2017, your total income was low enough that your tax owed was probably zero (the first ~$10k of income is excluded for singles), so you received all your withholdings back. For 2018, because you worked the whole year, your withholdings came close to matching your total tax owed (as they're designed to), so your refund is small.
If your W-2 is correct, the information you entered in TurboTax already properly accounts for your annual totals including the effect of the raise late in the year.
If you're lucky enough to earn more money over time, you'll have the privilege of paying higher and higher tax rates.
The calculation may very well be correct, because income taxes (federal and some states) are progressive, not flat. Your refund depends on your tax withholdings in relation to what you actually turn out to owe. For 2017, your total income was low enough that your tax owed was probably zero (the first ~$10k of income is excluded for singles), so you received all your withholdings back. For 2018, because you worked the whole year, your withholdings came close to matching your total tax owed (as they're designed to), so your refund is small.
If your W-2 is correct, the information you entered in TurboTax already properly accounts for your annual totals including the effect of the raise late in the year.
If you're lucky enough to earn more money over time, you'll have the privilege of paying higher and higher tax rates.
answered 2 hours ago
nanomannanoman
4,59511015
4,59511015
add a comment |
add a comment |
SemperAmbroscus is a new contributor. Be nice, and check out our Code of Conduct.
SemperAmbroscus is a new contributor. Be nice, and check out our Code of Conduct.
SemperAmbroscus is a new contributor. Be nice, and check out our Code of Conduct.
SemperAmbroscus is a new contributor. Be nice, and check out our Code of Conduct.
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