February 24, 2009

The 600 Dollar Tax Lesson


Let's get right down to it, unless I've really messed up the math on my taxes (I am re figuring as soon as I finish this post), which is possible I admit, Emily and I owe the federal government around 600 bucks in taxes this year. Now, how is that even remotely possible? Doesn't seem right does it? I live an uncomplicatedly poor revenue lifestyle. No investments. No house. No strange rich people problems that were getting all those Obama aides in trouble. No, sir. Just every two weeks, Emily or I would get a check, then we would save it and spend it accordingly, wait two more weeks, and repeat the process. That's it. So, how (oh god how) did that kind of fiscal simplicity turn into 600 plus bucks in the hole? Well, I figured it out.

Emily and I have worked something like 6 different jobs in the past year. None of them particularly well paying. But we were still paid nonetheless, so federal taxes needed to be taken from our checks. Obvious and simple enough. And when we filled out our W4 forms to sign up for our money to be given to the governemtn, we checked married because, we are indeed married, which means that more than likely for each W4 we said we had two dependents, (one for me, one for her) because looking around this apartment, there's only two of us, and we clearly depend on each other, so two dependents is accurate. However, right there is where the mistake was made. Big time.

See, all of our jobs paid very little. So if you are paid very little from a job, say 300 dollars a paycheck and you claim two dependents, they don't take out very much in taxes, if any at all because you make so little it doesn't qualify for a two-dependent person. That's just the way they roll. But, say you have another job that pays 300 dollars a paycheck, with also two dependents, they don't take out much taxes either because that's how they roll as well, nice guys like that because they want you to be able to eat and pay for gas to come to work. But, see the problem is, in the eyes of the government you made 600 dollars total, so you owe them 600 bucks worth of taxes no matter how many sources it came from. However, your two jobs combined did not take out 600 dollars worth of taxes from your checks because you earned so little money from each respective employer. Do that same math but extend it to four more employers for a whole year, with little with holdings because of little pay...see where this is going? Combine them all, as the federals see it, and you get a greater tax burden than what was paid out.

Therefore, by the end of the year you are fucked even though nothing was really done wrong. The jobs didn't screw up because they aren't paying you much, so they aren't going to withhold much per regulations. And Emily and I filled out the forms right. Nothing really seems to have been done wrong but we still owe a bundle (except maybe my math, which I will go over again).

So that's the lesson I learned today. So if married and poor, stuck working multiple jobs, claim one person at most and agree for the federales to take an additional bite of the check because otherwise you wind up owing one stiff fucking tax bill by the end of the year. Well, I'll be sure not to have this happen this year, if I can help it.

Oh, and I haven't figured the state ones yet, so this could mean more money out. (Gulp.) And combine this joy of joys with that other health insurance debt I incurred, this is close to 2,000 dollars in surprise debt that has arrived in the past 3 weeks without anything really happening.


viva el mustache


Philly Baby said...

Damn, my heart goes out to you both. Wouldn't it be great if we had a tax agency that came to your house and that was how they decided how much tax you owed--see, you and Emily, me and Jenny, hell, nearly every MFA grad lives in really crappy circumstances (shitty apts, rotting homes, piss-poor jobs that are tiding us over until we land real work, etc) and then these govt line-towers would have to say, "Woah, what a crappy apartment you have to deal with while you're getting on your feet. No taxes owed, son." I don't think this idea leaves any room for abuse--after all, who would willingly live in the ratholes we populate now?

Luke said...

Make sure you deduct yours or Emilys education doing the lifetime learning credit -- it's actually more productive than deducting your tuition (you can't do both). You can knock a good deal off that 600 bones. Also, make sure you deduct the interest from your student loans.

Bryan said...

Luke, I double checked the 8917 (that's the tuition deduction), and it looks like I'm going to be able to knock down this tax bill by a little more than half.


Bryan said...

So, Luke, thanks for the advice. I figured out my mistake then came here to post that I found out that you can still deduct tuition even if its paid with student loans...then I saw your comment and was like, right on! I'm not crazy!

Not It said...

No Stimulus Rebate?? That's the only thing that saved me this year.

Luke said...

Either I'm full of good advice or you and I are going to be audited soon. Shit. Okay, bear with me one more second. You can deduct your tuition from your combined income -this lowers the amount of tax that you are supposed to pay OR (and the "or" is important) you can take the lifetime learning credit (same form), and what that does is gives you a credit on your tax... which is actually better.

You make 30,000, and you deduct 5000 in tuition... that means you look up 25000 in your tax table which means you pay like 2000 bucks in taxes.


You look up 30,000 in the tax table, figure out that you are supposed to pay 2300 bucks. Then you take your lifetime learning tax credit. Say 500 bucks. Then you subtract that from your tax and you are only supposed to pay 1800 in taxes.

Guess what I did all last weekend? Sorry if you already knew all that shit, I was excited to figure it out last weekend.

Diana said...

That's terrible.

The tax stuff is so confusing. I'm guessing what happened is that since you and Emily both claimed two, it was like you guys were claiming four?

I always have claimed zero dependents so I'm guaranteed a tax return.

Diana said...

You guys should be able to claim moving expenses, too, right? Since you had to move for Emily to go to school? Or are moving expenses only when you move for a new job--Luke, you should be able to write off that.

Luke said...

I think you can write moving expenses off if you move for school. I didn't write mine off because Northwest paid for it. You should change the title of this blog to the "Benevolent Help Desk of H&R Block."

Big Perm said...

I always claim 0. Since it's the beginning of the year now, go to your employer and ask if you can resubmit your W4s and claim 0. You'll make less over the year, but you'll get a bunch back next tax season.