Tax help please - think I will severly overpay?

Question

What does this mean exactly and what should I do?

Based on the information you previously entered, your anticipated income tax for 2007 is $3,843. If you do not change your current withholding arrangement, you will have $12,511 withheld for 2007, resulting in an overpayment of $8,668 when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows:
For the only job you entered (which has a projected salary of $41,650): 11 allowances.
Check the “Single” box on your Form W-4.
Assuming these recommended allowance(s) are in effect for the rest of 2007, your expected refund should be about $2,100. Following this recommendation will ensure that the amount withheld from your wages will cover all of your projected tax liability while minimizing your refund.

Caution! The recommended number of allowances will result in no income tax being withheld from your pay (because your year-to-date withholding

Answer 1

I don't know what information you gave your employer or the W-4 calculator. Was it accurate or not? It seems to me that you entered additional withholding, since no one with income of $41K is going to pay $12K in tax.

Take your most recent pay stub for 2007 to a tax preparer, who can estimate your tax and anticipated refund or balance due. Then you will be able to make an accurate decision regarding any change in your allowances on your W-4.

If you don't want to do that, just change your withholding to "single" and "one" and you can't overpay nearly as much as indicated in the message you received.

Do not change your allowances to 11, that will need to be reported to the IRS and may raise an unwanted flag.

Answer 2

It looks like you did a calculation on the irs.gov website. You might want to check the boxes you input the amounts in. You may have entered a year-to-date amount into the "per pay" box. The amount of taxes withheld is calculated by the site so if you put the YTD amount in the wrong box, it'll calculate the future withholdings based on that figure.

Ron, ChFC

Answer 3

Lower the number of exemptions you are claiming. You are having too much tax taken out of each paycheck. You could be getting that money in each check, puting it in a bank account, and earning interest. Instead, you are sending it the the US government, who will hold it until you file your taxes next April, and then send you the excess with no interest.

Answer 4

I would go ask a tax preparer like H&R Block professional. They can help you decide which is the best way for you to go.