Found out the hard way about claiming 0 while married

Discussion in 'Community Discussion' started by puma1552, Feb 1, 2014.

  1. puma1552 macrumors 601

    Joined:
    Nov 20, 2008
    #1
    My wife and I are married, file taxes jointly, and both claim zero on our W-4. I assumed we were getting a nice refund this year.

    Well I found out the hard way that if you are married filing jointly and both of you claim 0, if you have a good income and little/no deductions, claiming 0 on your W-4 still results in not enough taxes being paid, and needing to pay in.

    Had to do the two earners worksheet on the W-4 to have them take even more out of my check so I don't have to pay in next year.

    Guess I can pretty much forget about ever getting a refund again unless I have some kids and buy a house and have massive deductions.

    /rant
     
  2. MacDawg macrumors P6

    MacDawg

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  3. puma1552 thread starter macrumors 601

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    Nov 20, 2008
    #3
    lol.

    Curious, and I haven't looked into this, but would anything be different if we filed married but separate? I guess I don't really know why they give you two different options for filing if you are married, presumably there are specific situations where one way is more beneficial than the other.
     
  4. gsugolfer macrumors 6502a

    gsugolfer

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    Georgia, USA
    #4
    My wife and I are in a similar situation to you as far as comparable, relatively good incomes. Our first year together, I didn't tell her to withhold single/0. I did, because I knew the withholding tables are biased against equal high incomes. As for using the MFS status, it shouldn't really affect your total tax, because you can't have one spouse itemize and the other take the standard deduction. This is assuming your incomes are similar, of course - and you said they were.

    Unfortunately, we had to pay (what I consider) a decent amount for our 2011 return. We fixed that in the middle of 2012 by withholding an extra amount each paycheck through the end of the year, and got her switched over to single/0 for 2013.

    With both of us using s/0, we'll get about a $400 refund, which is about as close getting it "perfect" as you can with the amount of total tax we have to pay.
     
  5. maflynn Moderator

    maflynn

    Staff Member

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    #5
    If you can't itemize then yeah it can be painful :(

    I'm lucky that I have sufficient deductions to itemize
     
  6. Plutonius, Feb 2, 2014
    Last edited: Feb 2, 2014

    Plutonius macrumors 603

    Plutonius

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    Location:
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    #6
    Even if you are single, if you earn a fair amount of investment income, you will still owe taxes if you claim 0. I myself would rather owe money then give the government money up front.

    If it really bothers you, have additional taxes taken out and that way you will get a refund.

    Everyone that I know who looked into this, found that it wasn't worth it to file separately. I would check with a tax preparer and see what they think.
     
  7. ucfgrad93 macrumors P6

    ucfgrad93

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    #7
    Congratulations on making good money. Enjoy it!:D
     
  8. Tomorrow macrumors 604

    Tomorrow

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    #8
    I had to pay about $1200 or so in two consecutive years not long ago. I changed my withholding to single/1 dependent (left my wife's withholding the same), and I've gotten pretty substantial refunds ever since.
     
  9. puma1552 thread starter macrumors 601

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    Nov 20, 2008
    #9
    By that you mean married but withhold at the single rate?
     
  10. Tomorrow macrumors 604

    Tomorrow

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    #10
    Yes, we still file "married filing jointly" on our return, but my withholding is at the single rate, plus one dependent (we have a child).
     
  11. Huntn Suspended

    Huntn

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    #11
    Be thankful you did not claim "2"? ;) Claiming "0" mean that more taxes are withheld, not less. So you learned the hard way what getting married does for two working spouses without deductions, not about claiming "0".
     
  12. puma1552 thread starter macrumors 601

    Joined:
    Nov 20, 2008
    #12
    How much of a difference does it make if you check the married box or the married but withhold at the single rate box on the W-4, assuming the same number of dependents in each case? I've been under the impression that it wasn't much of a difference, but maybe it is? Maybe I'll just have my wife and I both check that married but withhold at single rate box instead of withholding additional while checking the married box?
     
  13. gsugolfer macrumors 6502a

    gsugolfer

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    #13
    Check here for the answer to that question: http://www.irs.gov/pub/irs-pdf/p15.pdf
     
  14. Tomorrow macrumors 604

    Tomorrow

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    #14
    In my case, we went from owing about $1200 to getting a refund of close to $4000. We didn't change her withholding at all.

    Bear in mind, your pay checks are very noticeably smaller doing this.
     
  15. Gregg2 macrumors 603

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    Milwaukee, WI
    #15
    I tried comparing married filing jointly to married filing separately a few times after first getting married. Back then, jointly worked out better.

    Well, with that caveat, perhaps you're correct. Our state withholding rate is absurd. We claim extra exemptions, and still get a small refund. We have the federal set up to have to pay in. After subtracting the state refund, we pay between a few hundred to 1K or even higher on April 15th.

    That is, you've given the government an interest free loan. Some people like that for peace of mind. To each his own. If you like it, that's what counts.
     
  16. senseless macrumors 68000

    senseless

    Joined:
    Apr 23, 2008
    Location:
    Pennsylvania, USA
    #16
    High income and no home mortgage interest and property tax deductions? That's a good place to start. And, you can invest in tax managed mutual funds or tax frees. If you had children at home, you could make a case for a one income household.
     

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