yet another tax refund question....?

Question

so, my husband has a vehicle that he uses 100% for work, and put over 26,000 miles on it last year...at the 2006 standard milage rate of 44.5 cents/mile that would be a deduction of over $11,500, BUT (here the question) we only had about $1200 in federal with holding..so can we only get a refund for as much as we paid --up to $1200, or will be getting more b/c of our large deduction?

Answer 1

First of all, it doesn't matter what you had withheld. What matters is the total taxes you owe for the year.

Deductions can only take your income down to zero. Once it's at zero, then you don't owe any taxes, but don't get any further benefit from the deduction either. A deduction reduces your taxable income, not your tax, so if you're in for example the 15% bracket, a deduction of $11,500 would mean about $1725 tax savings, assuming you owed that much.

Is this a car he uses in the course of his employment, or in a business of his own? If it's his own, he might be able to carry over some of the business loss to a future year or years.

As far as the refund, the most you'd get, if your tax ends up zero, is what you paid in, unless you're eligible for a refundable credit like the Earned Income Credit or Additional Child Tax Credit - with those, you can get back more than you had withheld.

Good luck.

Answer 2

Not enough info tell you what you will owe...BUT you can not exceed a refund check above what you withheld...