Does this seem right to you???

[MacFan782040]

I got my W2 form today in the mail. I made $4,226 total in 2005.

The Federal tax withheld was $60.00
Social Security tax was $262.07
Medicare was $61.29
State tax was $129.79
Local tax was $42.29

Now, according to my Dad, he said I owe the Federal Gov't around $400 because the place I worked at only withheld $60. How can this be right!!!??!?!??? I only made around $4000, and if you add up all those taxes above, plus $400, it is close to $1000.

So that means 1/4th of my income goes to taxes?? Even when I make so little?

I'm mad cause I don't remember it being this much last year. And why would my employer withhold so little?

Thanks for the help.

 

[clayj]

I got my W2 form today in the mail. I made $4,226 total in 2005.

The Federal tax withheld was $60.00
Social Security tax was $262.07
Medicare was $61.29
State tax was $129.79
Local tax was $42.29

Now, according to my Dad, he said I owe the Federal Gov't around $400 because the place I worked at only withheld $60. How can this be right!!!??!?!??? I only made around $4000, and if you add up all those taxes above, plus $400, it is close to $1000.

So that means 1/4th of my income goes to taxes?? Even when I make so little?

I'm mad cause I don't remember it being this much last year. And why would my employer withhold so little?

Thanks for the help.

If you made $4,000 and only $60 was withheld for Federal tax, you were definitely under-withheld.

And the amount that's withheld depends on your W4. You might want to check with your employer to see why so little is being withheld.

 

[kingcrowing]

hmm, clay is def right there, but I think $400 might be a bit steep as well... you really should look into it, but when you file your taxes, its free online, you can find out how much you owe

 

[IndyGopher]

I got my W2 form today in the mail. I made $4,226 total in 2005.

The Federal tax withheld was $60.00
Social Security tax was $262.07
Medicare was $61.29
State tax was $129.79
Local tax was $42.29

Now, according to my Dad, he said I owe the Federal Gov't around $400 because the place I worked at only withheld $60. How can this be right!!!??!?!??? I only made around $4000, and if you add up all those taxes above, plus $400, it is close to $1000.

So that means 1/4th of my income goes to taxes?? Even when I make so little?

I'm mad cause I don't remember it being this much last year. And why would my employer withhold so little?

Thanks for the help.

Why are you just now noticing that your withholding was too little? I assume you got some sort of pay statement with each check.

That figure, $400, sounds about right. That's 10% of your income (not sure where you got the 1/4 figure) With only $4,000 in income for the year, you're clearly someone's dependent, whether they claim you or not, so you can't claim your own exemption.

Make sure you have the right withholding on your federal W4, as the above posters noted. You should probably be filing as single (presumably) with no dependents/exemptions (S0)

 

[Deepdale]

... Now, according to my Dad, he said I owe the Federal Gov't around $400 because the place I worked at only withheld $60.

The inadequate amount of federal withholding tax also puts you in the position of being liable for an estimated tax penalty, which is generally asserted when a taxpayer does not have at least 80 percent of their final tax liability prepaid through withholding or voluntary payment of estimated tax on a quarterly basis.

 

[MacFan782040]

Alright I'll get it figured out. I emailed my boss and he said the $60 should cover it and my dad is wrong...let's hope that's right. Thanks

 

[applebum]

From my recollection of the days when I earned about that:

You won't owe anything, in fact you should get your Federal and state taxes back. If you are filing the EZ form, there will be a personal exemption amount (should be around $10,000 I think) and you earned no where close to that. If you parents are claiming you as an exemption, then that will change how you do your taxes.

Of course, my wife and I now make enough that we have an accountant do our taxes. It has been a long time since I filed an EZ form. But 10 years ago when I earned that amount of money, I always got everything back. I think you will be fine.

Any accountants on here that can verify this for him?

 

[MacFan782040]

I always let my parents do my taxes...

I wonder if they always did them wrong because I NEVER got money back in the 3 years I worked there. I think last year I had to write a check out for $60? for the Federal Gov't. I made a bit more, maybe arounf $5500, but still. I have a friend that worked at Kmart last year, and he earned probably around $8000 and he told me he got back like $300 in taxes. And I owed them? It just makes me wonder...

What are the advantages of taking it somewhere like HR Block? Is that just for people that don't know how to do it, or do they really find you extra money?

 

[Lyle]

I always let my parents do my taxes...

I wonder if they always did them wrong because I NEVER got money back in the 3 years I worked there. I think last year I had to write a check out for $60? for the Federal Gov't. I made a bit more, maybe arounf $5500, but still. I have a friend that worked at Kmart last year, and he earned probably around $8000 and he told me he got back like $300 in taxes. And I owed them? It just makes me wonder...

What are the advantages of taking it somewhere like HR Block? Is that just for people that don't know how to do it, or do they really find you extra money?

If your taxes were complicated enough that there were things (like obscure deductions) you could accidentally overlook, it might be worthwhile to take it to a professional tax preparer like H&R Block. I don't think that it be worth it for you, however, given what you've told us about your situation. Like applebum said, you're almost certainly eligible to just file the 1040-EZ, and you can finish that yourself in really no time at all.

The fact that you never got a refund, or that you even had to write a small check last year, doesn't (necessarily) mean that your parents made a mistake on your tax returns. It just means that you were withholding just enough to cover your tax liability, and that there was therefore nothing left over to refund to you.

In contrast, your friend who worked at K-Mart, on the other hand, may have been having too much withheld from his paycheck every month. When tax time came around, he had actually withheld more than he owed the IRS, so they sent him a refund of the difference.

P.S. Just some friendly advice, but I'd recommend that you try to do your own taxes this year, with your parents' help of course. That is to say, sit with them when they're working on your tax return, and start learning about how it all works.

 

[Macaddicttt]

They only withheld $60 for $4000 of work? Wow. When I work over the summer and make between $3000 and $4000 or so, I get a rebate of a couple hundred...

 

[Kwyjibo]

Ok a few things ....

1. You're friend got a refund ... yeah thats because he was paying WAY more than you in original taxes to the governement. the money he got is equal to the money you probably should have paid and gotten refunded.

2. Always trust your dad over your boss ... even if your dad is wrong ... and its way more fun to prove your dad wrong than your boss.

send me a PM I can compare some numbers for you ... not as a professional at all but to give you an idea.

Fun side story
When I was 16 I got my first job, after two months some hours were missing off my check (always keep track of that stuff on your own). I told my boss about it and she had done an "oops I forgot" ... she offered to pay me in cash, it was four hours at $6 / hr ... I asked for 24 .... she said oh not ... i'll give you 20 because of taxes and stuff, I said nevermind that just put it on my check. I know there are no taxes on cash ( illegal anyway). My dad had taught me that for every $1 paid on things like SS your employer pays a dollar too so I figured hey why not. (if you didn't guess I was earning very little and my taxes were low and I was getting a full refund anyway so I figured why not!)

 

[prostuff1]

Well i went back threw some of my pay checks from the past couple of years.

In 02 i made about $1,440 and had about $150 withheld total. That includes federal, F.I.C.A., State and Medicare.

In 03 i made about $2,020 and had about $240 withheld total. Again that includes everything above.

In 04 i made about $3,500 and had about $500 withheld total.

In 05 i made about $2,000 and had about $270 withheld total.

The highest i ever owed the federal government was about 200 when i made the $3,500.

 

[Deepdale]

I got my W2 form today in the mail. I made $4,226 total in 2005. The Federal tax withheld was $60.00

Now, according to my Dad, he said I owe the Federal Gov't around $400 because the place I worked at only withheld $60. How can this be right!!!??!?!???

Assuming total income = $4,226.00 and your filing status single. If you are capable of being claimed as a dependent on the tax return of your parents (whether they choose to do so or not), you are not entitled to any personal exemption deduction amount, but you are allowed to reduce your total income by a standard deduction of $4,476.00 (in your case the sum of your total income plus another $250.00). Therefore, your taxable income is reduced to zero … you will then be entitled to a refund of the entire federal withholding of $60.00.

 

[kretzy]

It all seems so complicated. Here, we only begin paying tax after we've earned $6500. 1/4 of your income seems way too high, but I have no idea how your tax system works.

 

[Deepdale]

It all seems so complicated.

It is all part of the grand design ... a convoluted and twisted system that is sanctioned by lawmakers and which keeps attorneys and accountants happy and earning a very decent living.

 

[sushi]

I always let my parents do my taxes...

I wonder if they always did them wrong because I NEVER got money back in the 3 years I worked there. I think last year I had to write a check out for $60? for the Federal Gov't. I made a bit more, maybe arounf $5500, but still. I have a friend that worked at Kmart last year, and he earned probably around $8000 and he told me he got back like $300 in taxes. And I owed them? It just makes me wonder...

What are the advantages of taking it somewhere like HR Block? Is that just for people that don't know how to do it, or do they really find you extra money?

Try not to think in terms of how much you or someone gets back but rather how much you pay.

For example, let's say person A pays 10,000 in taxes and receives a 4,000 refund and person B pays 8,000 in taxes and receives a 3,000 refund.

Who had the higher return amount? Person A.

Who paid the fewest taxes? Person B.

Secondly, I hope that you are investing 10% of what you earn. Nothing like starting early and then being able to retire early if you want.

 

[sushi]

It all seems so complicated.

The US Federal Tax code is very complicated.

Wish we had a simple flat tax or a consumption tax.

BTW, most of the wealthy folks that I know would prefer a flat tax even though they would pay more in taxes. The code is so complicated, that many worry about their legal write-offs. Even the IRS cannot give consistent advice when reviewing complicated returns. What a mess.

 

[Kwyjibo]

when you figure out the flat tax ... go polish your shoes so they're shiny when the nobel committee calls your name

Flat Tax woulld also destory a whole industry (tax accountants) ... if we had one, that would be a big barrier to using it.

 

[miloblithe]

BTW, most of the wealthy folks that I know would prefer a flat tax even though they would pay more in taxes.

Come again?

 

[sushi]

Come again?

Most wealthy folks have many legal tax write-offs. They pay very little federal taxes. And rightly so because they are taking advantage of the legal write-offs that are available to them.

Without exception, my wealthy friends (all multimillionaires -- no billionaires yet so they may feel differently) wish they could just pay a flat tax and be done with it. No worries. No hassles. No bookkeeping. Simple.

Instead they have to comply with a convoluted tax code that requires an army of accountants and lawyers to interpret. Many times, the tax code does not make sense.

Here's a personal example. I inherited a small amount ($2,000) from a relative. I figured that I had to claim some sort of income. Rather, the lawyer gave me the IRS form for inheritances that had a tax write-off. I verified this was correct. It was. Weird.

IMHO, instead of a loss, I should have had to pay say 200 bucks if the flat rate was 10%

Here is another example. I know of an individual who traveled back to the states to visit his property. This is a known benefit of owning income producing property. What got me is that he flew his family back business class. Because his kids were old enough, and he used them to clean up around the house the required time, he wrote the whole trip costs off. No, he did not break the rules. He actually went to the American Embassy in Tokyo to verify everything with the IRS before he took the trip. Him I can understand. His whole family makes no sense to me. Again, this is weird.

Here’s another one. I have a friend who earns a ton of money via rental properties, but cannot contribute to an IRA account because he has no earned income. WFT?! This makes no sense to me. Sure I understand the situation but I don’t agree with it.

Like I said, without exception, my wealthy friends would prefer a flat tax. It is simple and easy to implement.

To me, I think of all the tax dollars saved by having a much smaller IRS organization, the trees saved due to fewer forms, the savings on accountants and lawyer fees, court costs when there is an issue, and everyone else that makes money on the tax system. Talk about non-value added.

Anyway, I hope that answers your question a bit.

 

[tpjunkie]

Ugh I hate taxes...my last paycheck was for around $1600 and 400 of that went to taxes...at least I should have nearly a grand coming to me in my tax rebate this year.

 

[sushi]

when you figure out the flat tax ... go polish your shoes so they're shiny when the nobel committee calls your name

Flat Tax woulld also destory a whole industry (tax accountants) ... if we had one, that would be a big barrier to using it.

I imagine that it would end up being around 10-15%

If I were king for a day, I would make it flat all the way up. No graduation based on income.

I would have no deductions. None. Zip.

If the rate was 12%, and you earned $1,000 you would pay $120.

If you earned 1,000,000 (Very few people earn this much per year) you would pay $120,000.

It would take very little to administer this system. And if the revenues aren't enough, then increase the rate the next year. If too much, decrease it.

A flat rate would not be all that hard to implement if everyone really wanted to do it.

Reminds me of the tax cuts. Many folks think that means less money for the government, but rather is spurs industry and business who end up paying more taxes based on more sales.

...my shoes do need a polishing! 😀

 

[miloblithe]

Reminds me of the tax cuts. Many folks think that means less money for the government, but rather is spurs industry and business who end up paying more taxes based on more sales.

Many folks may believe you, but not those who can look up statistics.

http://www.taxpolicycenter.org/TaxFacts/Tfdb/TFTemplate.cfm?DocID=200&Topic2id=20&Topic3id=23

US government total receipts:

2000: 2,025.2
2001: 1,991.2
2002: 1,853.2
2003: 1,782.3
2004: 1,880.1

Or if you prefer constant dollars:

2000: 2,025.2
2001: 1,945.7
2002: 1,780.5
2003: 1,677.7
2004: 1,722.1

 

[sushi]

Many folks may believe you, but not those who can look up statistics.

http://www.taxpolicycenter.org/TaxFacts/Tfdb/TFTemplate.cfm?DocID=200&Topic2id=20&Topic3id=23

US government total receipts:

2000: 2,025.2
2001: 1,991.2
2002: 1,853.2
2003: 1,782.3
2004: 1,880.1

Or if you prefer constant dollars:

2000: 2,025.2
2001: 1,945.7
2002: 1,780.5
2003: 1,677.7
2004: 1,722.1

Thanks for the data.

The economy's response to tax cuts is not instantaneous.

2005 through 2010 looks great to me!

Guess that I am missing something here.

 

[superbovine]

I'm mad cause I don't remember it being this much last year. And why would my employer withhold so little?

Thanks for the help.

Before posting a question like this don't you think your question has already been ask by millions of Americans to the IRS? Naaaaa... Go right the source next time.

IRS Withholding Calculator
http://www.irs.gov/individuals/article/0,,id=96196,00.html