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Taxable income for the uninformed.

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jimmydean

jimmydean

The Official Meat of Ridemonkey
Sep 10, 2001
43,097
15,181
Portland, OR
So the wife and I made a little more money this year than last. We got $250 back from state but we owe the feds $3500. We are both claiming zero but she makes so little, they don't take out nearly enough.

It seems we made $15k more last year than the year prior. Do we just withhold more in taxes, or would adjusting our 401k contributions make a difference? The wife doesn't want to bump up our contributions if it will mean a lot less per month just to cover the taxes. But I would much rather pay ourselves than the feds. The standard deduction is bullshit.
 
Adventurous

Adventurous

Starshine Bro
Mar 19, 2014
10,851
9,891
Crawlorado
jimmydean said:
So the wife and I made a little more money this year than last. We got $250 back from state but we owe the feds $3500. We are both claiming zero but she makes so little, they don't take out nearly enough.

It seems we made $15k more last year than the year prior. Do we just withhold more in taxes, or would adjusting our 401k contributions make a difference? The wife doesn't want to bump up our contributions if it will mean a lot less per month just to cover the taxes. But I would much rather pay ourselves than the feds. The standard deduction is bullshit.
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You can have additional taxes withheld if you choose, regardless of your withholding declaration, so you don't end up in that situation next year.

EDIT: Removed incorrect advice cause I wasn't paying attention and acknowledge my stupidity.
 
Last edited:
Westy

Westy

the teste
Nov 22, 2002
56,005
22,043
Sleazattle
I usually run my numbers in September and adjust various contributions and withholdings to target a near zero tax refund.
 
Full Trucker

Full Trucker

Frikkin newb!!!
Feb 26, 2003
11,136
8,772
Exit, CO
Sounds like you just need an investment property or two. I think @kidwoo might have some advice regarding this.

Serious answer: I’m no tax pro but that sounds fishy. If the standard deduction isn’t working for you, maybe it’s time to try itemizing? Have you considered (or are you currently using) a pro tax preparer? I have for the last 15+ years and I find that it’s money well spent.
 
StiHacka

StiHacka

Compensating for something
Jan 4, 2013
21,560
12,508
In hell. Welcome!
So what if you owe $3500 now or adjust your withholdings? The underpayment penalty is negligible if you file/pay on time.

From my own experience, the recent-ish cap on SALT deductions made itemization way less interesting than in the past.
 
maxyedor

maxyedor

<b>TOOL PRO</b>
Oct 20, 2005
5,496
3,141
In the bathroom, fighting a battle
Have you considered an off shore bank account? Or just become rich to the point you no longer pay taxes?

We do pretty much what Westy does, look at the rough math 3/4 of the way through the year and adjust one of our W2s accordingly, usually get it close enough.
 
stoney

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
22,002
7,886
Colorado
jimmydean said:
So the wife and I made a little more money this year than last. We got $250 back from state but we owe the feds $3500. We are both claiming zero but she makes so little, they don't take out nearly enough.

It seems we made $15k more last year than the year prior. Do we just withhold more in taxes, or would adjusting our 401k contributions make a difference? The wife doesn't want to bump up our contributions if it will mean a lot less per month just to cover the taxes. But I would much rather pay ourselves than the feds. The standard deduction is bullshit.
Click to expand...
Check your email.
 
jimmydean

jimmydean

The Official Meat of Ridemonkey
Sep 10, 2001
43,097
15,181
Portland, OR
Full Trucker said:
Sounds like you just need an investment property or two. I think @kidwoo might have some advice regarding this.

Serious answer: I’m no tax pro but that sounds fishy. If the standard deduction isn’t working for you, maybe it’s time to try itemizing? Have you considered (or are you currently using) a pro tax preparer? I have for the last 15+ years and I find that it’s money well spent.
Click to expand...
Itemized was like $15k vs the $25k standard.
 
Toshi

Toshi

butthole powerwashing evangelist
Oct 23, 2001
39,758
8,758
Adventurous said:
Look into making a Roth IRA contribution, credited towards 2020, to reduce your tax burden. Don't know your situation, but its worth seeing if/how that changes the numbers.
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I can predict that it'll make precisely 0 difference

because Roth

:D
 
stoney

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
22,002
7,886
Colorado
Adventurous said:
You can have additional taxes withheld if you choose, regardless of your withholding declaration, so you don't end up in that situation next year.

Look into making a Roth IRA contribution, credited towards 2020, to reduce your tax burden. Don't know your situation, but its worth seeing if/how that changes the numbers.
Click to expand...
Wtf are you talking about? Roth has fuck all impact on your taxes. It's contributed on an after-tax basis. It only has a benefit for you in the future.

Edit: just read Yoshi's comment.
 
Adventurous

Adventurous

Starshine Bro
Mar 19, 2014
10,851
9,891
Crawlorado
stoney said:
Wtf are you talking about? Roth has fuck all impact on your taxes. It's contributed on an after-tax basis. It only has a benefit for you in the future.

Edit: just read Yoshi's comment.
Click to expand...
Fixed. I was attempting to multi-task when I wrote that and made a stupid.
 
eric strt6

eric strt6

Resident Curmudgeon
Sep 8, 2001
24,386
15,158
directly above the center of the earth
jimmydean said:
So the wife and I made a little more money this year than last. We got $250 back from state but we owe the feds $3500. We are both claiming zero but she makes so little, they don't take out nearly enough.

It seems we made $15k more last year than the year prior. Do we just withhold more in taxes, or would adjusting our 401k contributions make a difference? The wife doesn't want to bump up our contributions if it will mean a lot less per month just to cover the taxes. But I would much rather pay ourselves than the feds. The standard deduction is bullshit.
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Hi this is Eric's wife, Ruth. My thoughts are that you can do both, increase your 401K and add a bit more to your federal tax withholdings. By taking these two actions you can decrease your taxable income (increasing 401K contribution) and directly increase your taxes paid in. Unfortunately, both steps decrease your cash in pocket. Without knowing more about your personal situation it is difficult to weigh in as to what steps best suit your situation. I always think that increasing 401K contributions is a good idea.
 
stoney

stoney

Part of the unwashed, middle-American horde
Jul 26, 2006
22,002
7,886
Colorado
eric strt6 said:
And in case you didn't know. Ruth is a CPA with a Masters in Tax who manages the North American taxes (USA, Canada, Mexico) for an international corporation
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I've talked with Ruth in the past; woman is fucking smart (and incredibly nice at the same time!). Still can't figure out how Eric made that happen.
 
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