Why am I having to pay taxes? Last year I paid dont know why, this year i have to pay but not as much help?

Question

So I was in the military finished up in April 06. I dont know why I had to pay taxes in 05 if in 03 and 04 were just fine. This year i have to apy again i dont know why. I didnt change anything on my tax forms i still get the tax deducted. This year i have to pay but not as much. Last year was ridiculous i paid 700 and for some reason they sent back almost 300 still dont know whats going on can anybody help please? Could this be an error not on my part?

Answer 1

Well, it sounds like a combination of things. If you paid $700 last year and they then sent $300 back, you didn't have enough withheld AND you made an error on your return. As a taxpayer, you alone are responsible for ensuring enough tax is withheld from your pay.

Without seeing your tax return, the IRS notice on the overpayment, and discussing your finances with you it's not possible to say exactly what the problem was.

If you're doing them by hand, I'd really recommend spending the $30 or so for a commercial tax prep package like Tax Cut or Turbo Tax. They dramatically reduce the chance of an error and speed the prep and filing process substantially. They work well for simple and fairly complex returns. I have rental properties and various investment and retirement accounts and they're always dead on the mark when I'm done.

At the very least, I'd suggest that you check with your employer and see what they are using for withholding exemptions from your Form W4. You probably should cut the number of withholding exemptions by 1 or 2 to get yourself closer to even money with the Tax Man.

Answer 2

If you sent money with your return and the IRS sent some back, they found an mathematical error on your return. The letter that was attached to the refund explained the error. Receiving a refund or owing money depends on 2 numbers that can't even be guessed at give the information you provided. Those numbers are your tax liability and the amount you had withheld or sent in throughout the year. 90% of the US population couldn't find their tax liability on line 63 of the 1040 if you handed them the complete tax for and pointed to line 63. You actually have total control over your withholding and estimated payments.

Answer 3

You need to talk to a tax person because you shouldn't be paying taxes on January through April 2006 because of being in the military. A tax expert would know for sure.

Answer 4

you got any dependants dude? a few rug rats running around the house and you can clean up with Earned Income Credit, another way to get money back is to have them take out more than they are required to I always put on my W2 zero and none as in no deduct for me or any of my family . and then when tax time comes I put my wife and kids in there and depending on how much you make you could get a lot back.