Taxes - Anybody else bushwhacked?

[Gunit_Sangh]

A few weeks ago I finished my taxes (fed) and found out I went from a $150 refund last year to paying $450 this year.

In 2003 I had a bit of overtime pay. In 2004 I had no overtime and with the small raise I got (thanks to the great * economy), the income for both years was almost identical. The deductions were also almost identical.

The end result - my adjusted gross income was within $200 for the two years. The amount of tax owed on the adjusted gross income decreased by $125 for 2004. But the amount of tax with-held from my check was $600 less. I did not submit any w-4 changes during that time.

Was the 2003 tax cut nothing more than a tax with-holding cut? The tax owed on our AGI clearly shows that amount owed only decreased by $10/month, but much less was with-held.

[bluestateguy]

1. I'm about to be

I'll do ok on income taxes, but the Texas legislature seems intent on raising sales taxes by a full one percent. Now if you're a homeowner you'll get a property tax cut, but because I am not all I get to do is pay more.

[liberal N proud]

2. Some Tax Cut Huh?

I will bet that all the CEO's and the like got theirs?

[Warpy]

3. You get the gold star

Yes, it was a withholding cut. However, an increasing number of middle income people, especially people who have children and really did benefit from the few tax cuts and deduction increases, are getting nailed by the Alternative Minimum Tax. You may want to amend your W-4 at work to 0 dependents to avoid having to pay extra next year. This sucker is NOT going away.

Oddly enough the proportion of billionaires facing this tax (for whom it was designed) is DECREASING.

The GOPers refused to vote for the AMT as a way of forcing rich people and corporations with slick accountants to duck their taxes entirely to pay a minimum tax instead if an income floor was attached to it. Hence, it's the middle class who will be nailed with this thing while the rich and the corporate skate.

Once again, people got fooled into thinking they got a tax cut when their deductions went up and their withholding went down. Like every other tax cut the GOP has presented, it's a windfall for the rich and a bait and switch for the rest of us.

[Disfronted]

7. bad advice

Very bad advice. The AMT is hitting more people because it is not indexed to inflation. If his income is steady (like he says) then he will not pay AMT in 2005 (assuming he did not pay it in 2004).

His W-4 needs to be adjusted for a little more withholding to keep him from owing at year end.

[Disfronted]

4. Your witholdings are a separate issue from the tax cut

The way to see if your taxes decreased is to look at Line 62 on Form 1040 - "Total Tax". If that line is lower in 2004 (on the same income) than 2003 you will pay less tax.

What likely happened is since your liability was lower they withheld less from your paycheck, so instead of getting the difference as a refund at the end of the year, you got most of it over the course of the year when you kept more fo your paycheck.

And it is finally worth mentioning the decrease in liability between 2003 and 2004 was likely not due to a Bush tax cut (since few cuts were enacted for 2004 that were not effective for 2003) but rather the IRS adjusts the tax brackets, exemptions and deductions each year for inflation.

In other words, if I make $40,000 in 2003 and then $40,000 in 2004, since $40,000 in 2004 is less in real terms, I am poorer and pay less tax in 2004 than I did in 2003.

[SoCalDem]

5. The withholding amount changed automatically so it would LOOK

like you were getting more money..You needed to re-adjust it on your own with the payroll dept..

Welcome to President Flim-Flam's New World Economy

[goodboy]

6. I owed 2400.00...got a 3K refund last year...

[noonwitch]

8. Buy a house

Then you can claim the interest you pay and get a nice $1500-2000 return every year.

[China_cat]

10. Nope. That only applies

if you have enough in deductions to itemize. If you don't have enough, you can't deduct mortgage interest. (Refinanced 2 years ago to try to get back that deduction...no dice)

[China_cat]

9. We got back about $800 last year

combined state and federal.

This year we are having to pay $2500. Salary is exactly the same as last year.

Salary is half what it was 5 years ago when we got back $1800.

[SouthernDem2004]

11. I did well but I own a home and have children so that helps alot.