At what point (in the US) do you need to pay when you file taxes?

[uberamd]

I am wondering what the requirements are for paying taxes in the US. I am a full time college student, and a dependent. I am also going to pull in ~$18,000 this year working, of which I expect around $3,000 to be taken out for taxes.

So when I file taxes, can I expect to have to *pay* this year? Last year I made $12,500 and got around $1,500 back when I filed. However, this year I am making around $5,500 more and this got me thinking: Will I need to pay?

I live in Minnesota if it matters, and I can't seem to find the requirements/information about this stuff.

 

[aristobrat]

AFAIK, what you get refunded (or owe) at the end of the year is directly proportional to how much you withhold each pay period.

If you withhold too much each pay period, you get a refund at the end of the year.

If you withhold too little each pay period, you owe at the end of the year.

You can adjust your withholdings via the W4 form you fill out for your employer. The more personal allowances you claim there, the less tax your employer should withhold per pay period.

I don't know exactly how they do it, but each job I've had (since I started working for min. wage when I was 16) has adjusted the withholdings as my wage has gone up. For the longest time, I used to claim 1 allowance on my W4, and I always got a decent refund at the end of the year. Now that I own a house, it's a little more complicated, but it all works out.

 

[steve2112]

In theory, you are in the 15% tax bracket, so you would expect to pay about 15% of your income in taxes. In reality, most people don't pay anywhere near their tax bracket. Deductions, credits, etc, all cause changes. You may want to do some searching for a projected tax burden. There are several sites where you can plug in your income, and amount taken out per paycheck, and it can predict if you will owe or get a refund.

 

[uberamd]

AFAIK, what you get refunded (or owe) at the end of the year is directly proportional to how much you withhold each pay period.

If you withhold too much each pay period, you get a refund at the end of the year.

If you withhold too little each pay period, you owe at the end of the year.

You can adjust your withholdings via the W4 form you fill out for your employer. The more personal allowances you claim there, the less tax your employer should withhold per pay period.

Seems like most of my friends only claim 1 on their W4 (and get a decent refund at the end of the year).

I have roughly $230 taken out of a $1,050 pay period twice a month currently. Obviously its lower during the school year as I don't work 40 hours, more like 23 a week.

 

[aristobrat]

Do you know if the $230 is just federal taxes being withheld, or does that include state, FICA, and all of the other fun stuff that gets deducted?

 

[uberamd]

Do you know if the $230 is just federal taxes being withheld, or does that include state, FICA, and all of the other fun stuff that gets deducted?

That help?

 

[Gregg2]

Your best answer would come from doing a pro forma tax return. Just get some blank forms and pretend it's December 31. Estimate the year-end totals based on what you know so far, and come up with the bottom line. Do this on Federal and State forms. This should give you a pretty good idea of where you will come out. At your income level, and as a student, the returns are really not that complicated.

 

[Gelfin]

In theory, you are in the 15% tax bracket, so you would expect to pay about 15% of your income in taxes.

This is not true, and it's the single most important thing that almost nobody in the US understands about how their income taxes work. Having a final income in a particular bracket does not mean that ALL your income is taxed in that bracket. Only the portion of your income above the bracket line is taxed at the higher rate.

Suppose the OP makes $18,000 adjusted gross income (the amount you actually pay taxes on after deductions). The first $8,350 of that will be taxed at 10% and the remaining $9,650 will be taxed at 15%. His effective tax rate would be a little under 13%.

It may sound like a niggling point, but many people actually fear getting raises because they don't understand this. They think it's possible to end up with less money after taxes if your raise pushes you into a higher tax bracket. It isn't.

OP, for a single person with no significant complicating factors like investment income or a mortgage, withholding is usually quite sufficient. If you didn't owe last year and haven't changed anything on your W-4, I would be very surprised if you owed this year.

 

[GfPQqmcRKUvP]

OP, for a single person with no significant complicating factors like investment income or a mortgage, withholding is usually quite sufficient. If you didn't owe last year and haven't changed anything on your W-4, I would be very surprised if you owed this year.

But if you (not you, Gelfin) understand a little bit of finance and are discplined enough, you'd withhold as little as possible. Withholding is giving an interest-free loan to the government. That is not something I want to do.

 

[Gelfin]

But if you (not you, Gelfin) understand a little bit of finance and are discplined enough, you'd withhold as little as possible. Withholding is giving an interest-free loan to the government. That is not something I want to do.

Agreed in principle, but there's no reason to worry about that at the OP's income level. At current savings rates he could net himself almost a buck in interest payments on that excess withholding.

 

[swiftaw]

Basically, some time between January 31 2010 (when you should receive your W2) and April 15 2010 when you are required to file your 2009 tax return. You'll calculate how much tax you owe and then compare it to how much has been withheld from you throughout 2009. If they have withheld more than they needed you'll get a refund. If they didn't withhold enough you'll have to pay the difference.

If you have a good idea exactly how much you'll earn for the rest of 2009 you can do a good job of predicting how much tax you will owe and how much will have been withheld.

 

[GfPQqmcRKUvP]

Agreed in principle, but there's no reason to worry about that at the OP's income level. At current savings rates he could net himself almost a buck in interest payments on that excess withholding.

Interest-bearing accounts? I usually go play roulette with my tax money and hope it works out.

 

[Tomorrow]

Suppose the OP makes $18,000 adjusted gross income (the amount you actually pay taxes on after deductions). The first $8,350 of that will be taxed at 10% and the remaining $9,650 will be taxed at 15%. His effective tax rate would be a little under 13%.

That, and depending on standard deductions, etc. - not all of his income is even taxable in the first place.

The single biggest thing hurting the OP is that he's a dependent. His tax burden is higher as a result.