I am using taxcut software to do my taxes. 2006 was my first full year of being married. When I type in my W2 information it shows me getting around $1500 refunded. When I put her information in seperately it shows around $1000 refund.
When I have both our information put in it show the refund being $150.
My check has me claiming 1 dependent and married. She has hers set up as 1 dependent.
I don't understand how this could be so low, when seperately we would get so much money back. Does this make sense to anyone? Input would be appreciated.
Thank you in advance
2007-02-11 18:20:08 · 4 answers · asked by syoung_2000 1 in Business & Finance ➔ Taxes ➔ United States
When you file a joint return, the incomes are added together. Since the tax rate is progressive, essentially the second income starts being taxed at whatever bracket the first one leaves off. So yes, this is probably correct.
2007-02-11 18:29:17 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
The combined incomes may push you into a higher marginal tax rate. If everything is inputted correctly and according to the Internal Revenue Code (IRC) you should save more money than filing as married filing separately. With the information provided this is the best answer I can give you at least you have until April 17 to get everything worked out.
2007-02-12 02:47:36 · answer #2 · answered by Finance atty 1 · 0⤊ 0⤋
On a joint return, your incomes are added together. Our tax system is progressive, meaning that the higher the income, the higher the tax rates.
The other aspect involved is the so-called "Marriage Penalty" built in to the tax structure. The tax system does not treat married couples equitably unless the family unit is the one typical 50 years ago with one breadwinner. It's not as bad as it used to be, but it still rears its ugly head. Call it a conspiracy to push for a return to "traditional family values" or call it a bloated anachronism that is slow to change but it is real.
With a refund of $150, your withholdings are just about perfect. You're not giving the government much of an interest free loan and you're getting the most money possible in both of your paychecks. If you want a larger refund, they only way you'll get it is to take a pay cut on payday.
2007-02-12 03:11:36 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 1⤋
well you could be in my boat. Separatly we would get $7500 back, together we get $1500!!!
When we buy a house in NJ, being married is going to cost us more than $1K/month. We are SERIOUSLY considering a "paper" divorce.
2007-02-12 09:12:24 · answer #4 · answered by NYC_Since_the_90s 6 · 0⤊ 0⤋