We make 140K and Turbotax says we owe $2200 in fed taxes this year, need help?

Question

What can we do besides increase our charitable giving significantly to reduce our tax bill. We already both claim married but withhold at a higher single rate. We have one child but all of the advantages are being phased out. Should we just hvae money taken out specifically for taxes, or are there ways to reduce your tax bill that can be beneficial all the way around. Any help would be appreciated. Thanks.

Answer 1

The poster here is saying that he owes $2200 on top of what has been withheld from his and his wife's paychecks, he's not saying that he only paid $2200.

The reason that you have to pay, even though you both claimed single and 0 exemptions, is that you are subject to the marriage tax penalty. In other words, your marginal tax rate as a couple is higher than the rate at which you are individually taxed. On your w-4 form, you can ask for an additional amount withheld from every pay check so you do not have to come up with the money at tax time.

Beyond that, you should look into other deductions or ways to defer taxes...401(k) contributions, IRA contributions, buy a home for interest and property tax deductions, etc.

Answer 2

Vote Republican. Democrats think that you are far too rich and they know much better how to spend your money. I'm not kidding here. For a married couple making $140K you are going to pay much more in income tax than will be accounted for by payrole witholding (a bad idea anyway since it just amounts to an interest-free loan to Uncle Sam).

If you think it's bad now, wait until 2011 when the Tax Cuts sunset.

The best thing to do is to have as little as possible taken out of your paycheck, and then set aside a certain percentage in a CD or some other interest-bearing account that will be used to pay your taxes. It's the same as payrole withholding except you earn interest that can be used to pay taxes next time around.

And hope that a whomever wins in 2008 will veto the tax increases that the current Congress thinks are necessary in order to get some of your $140K into the hands of someone who makes less.

(Yeah, I know I went political on a policy question...)

Answer 3

At this point, charitable giving won't help. You would have had to make the contribution prior to January 1. It sounds like you need to fill out a new Form W-4 with your employer.

Yeah...you need to pay taxes. If you're making $140K, you should have to pay SOME taxes.

Fill out a new W-4 with your employer if you want it withheld from your check throughout the year and not be subject to a penalty for underwithholding or underpayment.

Answer 4

Are you both claming 0 on your W4's? That's the only way to guarantee you won't owe.

Charitable giving doesn't get you that money back, dollar for dollar, so its not going to make sense if you're trying to shell out LESS cash. You'd probably have to donate close to $10K to negate that $2200 in taxes.

Just up your witholdings this year and you should be okay for next year-- but its too late to change 2006's taxes.

Answer 5

If the amount is green your getting a refund, if it is red that usually means you owe.. Recheck your work, usually people have a pretty good idea if they are going to owe taxes depending on their withhold status and how much they made during the year. If this was a total shocker, definitely recheck what you entered. We are always happy if we don't owe but it doesn't seem to happen that much since I am self employed and no taxes get taken out.

Answer 6

sounds like way way too little tax for that much income

Answer 7

Need more details before I can give answer

Answer 8

This year you just need to write the check.

To save you may want to increase your mortgage amount, that is what most of us do. You have under purchased.

Answer 9

Was asking myself the same thing