Tax Return Estimate Calculator
August 6th, 2007
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Question: Why do I owe? 0 Exemptions and lots of deductons?
Married, no kids, filing jointly. The software I use and some online calculator’s agree that I owe – but I can’t pass the sanity check when I take into account how much we paid.
~$140k AGI split between my wife and I.
Both had w4 marked “Married” for 0 exemptions and $10 extra.
$20k paid in mortgage interest 2007.
She had $18k in 1099-MISC, but paid $3600 of estimated (overpaid).We got it down to owing Federal only $2k, but the is the first time we owe, and we expected a healthy return…
So all I can think of is to withhold at “single rate while married”, anything to do to prevent owing again? Did I do something wrong or have we just hit a new tax bracket the our jobs don’t account for when withholding?
Thanks in advance.
Answer: You are in a 25% tax bracket, and there are S/E taxes on your wife’s 1099 (unless she made more than $97,500 on between that and her W2, then the S/E would be smaller…).
The incremental tax on that 1099 alone is over $6000…the estimated payments of only $3600 explain your shortfall.
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