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Since I am new to Fooldom, I have two questions. I am getting way too much back on my tax return this year. Is there a good strategy for minimizing Tax returns?

I don't mind getting some money back, but this year is just ridiculous. I'm not complaining about having the money, but would like to have had the opportunity to do something with it during the previous year. This was not expected.

Also, as this is my first post, is there a Discussion board etiquette guide other than the Newbie Tutorial?
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To reduce your tax refund, you will have to file a new W-4 with your employer. You can get a W-4 from your employer or from the IRS web site http://www.irs.gov

If you have multiple sources of income in your household or a second job, or more in itemized deductions than your standard deduction, be sure to work out the pertinent worksheet(s) on Page 2.

Publication 919 (also on the IRS web site) goes into more detail and has more worksheets.

If all else fails, you could just increase the number of allowances you declare on your W-4, but keep in mind that filing a fraudulent W-4 could result in a $500 fine, so it is better to go through the exercise of the worksheets before deciding to arbitrarily add 1 to your allowances.

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Can answer your first question - - - do your "due diligence" on Form W-4 ! !

In other words pay attention to the instructions re the amount you want to be witheld from your paycheck ! !
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If you have multiple sources of income in your household or a second job, or more in itemized deductions than your standard deduction, be sure to work out the pertinent worksheet(s) on Page 2.

I've always found the worksheets to be worthless. Or maybe it's just the front worksheet. Do you feel the multiple income sheets are adequate? I got married last year and we kept both of our withholdings at the single rate to be safe. Why is it that married withholding rates are lower when most couples end up actually paying more? I got socked with capital gains tax this year so I think I'll keep my withholdings the same just in case.

Thanks,
Mike
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I've always found the worksheets to be worthless. Or maybe it's just the front worksheet. Do you feel the multiple income sheets are adequate?

If you have good estimates of the amounts to be entered on the page 2 worksheet, and follow all instructions, they are pretty accurate.

I got married last year and we kept both of our withholdings at the single rate to be safe. Why is it that married withholding rates are lower when most couples end up actually paying more?

The married withholding rates assume only one wage earner. If both spouses work, the married rates will underwithhold unless you follow the instructions for adjusting your withholding allowances and assigning them to the higher wage earner.

Ira
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The married withholding rates assume only one wage earner. If both spouses work, the married rates will underwithhold unless you follow the instructions for adjusting your withholding allowances and assigning them to the higher wage earner.

Ira


What if we both make about the same amount (one of us makes slightly more)?

Thanks,
Mike
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IIRC, (it's been a number of years since both of us had W-2s), the one with the higher salary should take all of the withholding allowances. If you really want to do the calculations in all their gory detail, get a copy of Pub 15, Employer's Tax Guide. It will give you the precise amount to be withheld from each paycheck based on the number of withholding allowances claimed.

Ira
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