i was wondering if someone could give me some insight. i am a little worried that i may owe money this year. it is my first full year out of college. i was making about $45,000 last year and my only deduction is my 401K. i have heard that single people making "a lot" of money (whatever that means) usually have to pay back money in taxes. should i be expecting this? i have never owed befored since i was in school and claimed by my parents. any prediction would be helpful...
any prediction would be helpful... Any useful prediction is impossible without knowing what withholding allowances you claimed. If you filed your W-4 (the form you file with your employer) showing single with two or fewer allowances, you should get a refund.Considering that it sounds like your return would take about 5 minutes to prepare, why don't you do that and find out for sure?Phil MartiVITA Volunteer
butterfly414 says "I was wondering if someone could give me some insight. i am a little worried that i may owe money this year. it is my first full year out of college. i was making about $45,000 last year and my only deduction is my 401K. i have heard that single people making "a lot" of money (whatever that means) usually have to pay back money in taxes. should i be expecting this? i have never owed befored since i was in school and claimed by my parents. any prediction would be helpful..."Now, first off, there's really no reason to be worried, because you're not going to have to pay enough to set off penalties, because of the big increase in your income between the prior year and this. But you're wondering about the total.What you really are asking here, if you think about it, is is my withholding set where I want it, because you don't want to be paying in too much, but you don't want to have a surprise when your taxes are ready, and have to borrow from your credit cards (or Guido the Shark, or worse) to pay when you file your 1040.Now, chances are, you'll be fine, and they'll owe you a little. If you filled out your W-4 (that form for your employer that told them how many deductions... remember?) in a reasonable fashion, and you're pretty normal, you'll have a small refund. The tables are designed that way. But this is a good reason to do a rough draft of your taxes pretty early, to see where you stand. If you haven't done this yet (or finished your taxes), do one tonight, with just your W-2 amounts, and a rough number for investments and interest... and see whether you're over or under.Obviously, you can't do anything about your 2000 taxes, except to file as soon as possible (if the US owes you) or as late as possible (if you owe the US). But you should also do an exercise to check whether you want to change your withholding. What I suggest you do is do a rough estimate for next year's tax based on your last paystub; this assumes that you earn a regular income... people whose income is widely variable have harder estimates to make. But most of us can take our pay stub, and multiply by 52 (for those paid once a week) or 26 (forevery other week) or 24 (for twice a month) or 12 (monthly), and come up with a reasonable guess on what your income will be, and what the total withholding will be. Then fill out a copy of this year's form, using next year's numbers... it will be close enough. If you don't want to owe, that's the way to check it. And, if you discover you're going to get thousands back, or owe thousands, this is the chance to adjust your withholding while there's still most of a year for it to have an effect.Yes, you can get more elaborate... putting in an allowance for the Christmas bonus, or your investment profits or losses, or whatever... as much detail as you want. But a rough check will be enough to make sure that you're close.Now, obviously, this gets more elaborate as your life situation gets more elaborate... for instance, when you prepare to buy a house (and acquire the accompanying tax deductions). But in your situation, it'll take 20 minutes... most of which is finding the pay stub and the tax forms.Just my advice, of course... others may have a better idea. And again, chances are, they owe you, so you probably want to file ASAP.Fool On!Dick Smith
Just to add to my earlier post... I only had one deduction when I filled out my W-4. I am planning on doing my taxes tomorrow. I will let you know what happens... if you care...Thanks for the advice...
Well, I did my taxes and I didn't owe. I actually got a decent amount back. All that worrying for nothing. Thanks for the help!
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