How Did I End Up Owing Income Tax Question

by Laura
(Washington DC)

How To Income Tax Question

How To Income Tax Question

My husband and I married in 2010 and we did a joint tax return. We received a $600 refund. Nothing has changed from 2010 except that I got a $10,000 raise about half way through the year (so only $5,000 in 2011).


We make $130,000 combined a year and take the standard deduction. I have selected 2 on my W4 and my husband 1 for the last few years and we always got money back. We just did our 2011 Return and found out we owe $5,000.

How is this possible? Nothing changed except my raise from the previous year. By the way we are 26. Thanks for your help.

Comments for How Did I End Up Owing Income Tax Question

Average Rating starstarstarstarstar

Click here to add your own comments

Jan 28, 2016
Rating
starstarstarstarstar
Did you do your own taxes or pay to have them done?
by: Anonymous

My best guess is that someone made a mistake. Either in the previous filing or in this one. Although, if either of you changed your withholding (W4) that could make a huge difference. Did you change from single to married on your W4? the amount that is taken out of single payers checks is a higher amount than is taken for the same earned amount from a married person. The tax rate id higher for singles, than married. this not only applies at "tax time" but throughout the year on every paycheck. I used to file my W4 as married but withhold at the higher single rate. That way I KNEW I would never have to pay! Also, that $5000 extra may have jumped you up to the next tax bracket, which could also be the cause of you owing.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How do I handle the sale of a home equity financed vacant lot on which I intended to build?

by Jim
(Waukesha, WI, USA)

We purchased a lot in December 2007 with the intention of building within 8 months. We paid cash, but financed it with a HELOC of over $110,000. No payments were made in 2007.

We were unable to sell our home, so we did not build in 2008. We wrote off all the interest on the HELOC on our 2008 taxes. I recently read something about a $100,000 limit on home equity deductibility.

(Q1) First off, did we write off too much?
(Q2) Secondly, at what point does the lot become viewed as investment property, ineligible for home equity deductibility?

Now in June 2009, we are trying to sell the lot, on which we expect to take at $25,000 loss.

(Q3) What are the tax implications here?
(Q4) What about the interest I deducted already on what turned out not to be a primary residence?

Thanks for your advice.


Hi Jim,

Thank you for your question.

According to the IRS Publication 530, usually you can deduct the entire part of your payment that is for mortgage interest, if you itemize your deductions on Schedule A (Form 1040). However, your deduction may be limited if:

1) Your total mortgage balance is more than $1 million ($500,000 if married filing separately), or

2) You took out a mortgage for reasons other than to buy, build, or improve your home.

In addition, IRS Publication 936, says that you can deduct home equity line of credit interest limited to $100,000 if it is used for investment.

So, to answer your questions (Q1) and (Q2): I believe you can only deduct up to 100,000 of the loan interest as investment interest on Schedule A.

(Q3) Your 25,000 loss may be limited to a 3,000 deduction each year.

(Q4) When you sale the lot at a loss, there shouldn't be any impact with regards to the interest already deducted.

Thanks again for your contribution.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How Do I Handle RSU's Release But Not Sold

by David
(CA)

I had RSU vest in 2010. A portion was released to me (into a brokerage account) and a portion was withheld for paying taxes. I did not sell the stock in 2010 (sold it is 2011). How do a treat this transaction for 2010 taxes. I did not receive any tax forms and it was not handled on my W2

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

how I can be minimise my longterm capital gains tax

by abhijit majumdar
(durgapur.W.B)

I have sold one plot and earned Rs 1100000/as long term capital gain (aftr indexisation)Now I have planned to purchase one flat of Rs 2300000/out of which Rs 300000/three lahk will be invested by me and rest 2000000/(twenty lakh)will come from home loan.as the cost of the flat is 2300000/( greatr than long term capital gain), do I have to pay long tem capital gain this year
ii)Till I have not filed my return for A.Y 2011-12 and cound not invest any amt in capital gain deposit scheme
iii) I have also plan to invest another Rs 800000/eight lakh within coming two years
how much tax I have to pay on total long term capital gain of Rs 1100000/

pleasr advice
abhijit majumdar

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How the IRS Applies Payments for Late Taxes

by Bill
(Salt Lake City)

We paid some late taxes for tax year 2009 by making monthly payments to IRS. In the last month,the IRS filed a levy against my bank account for past taxes. It was for 2007. I thought I read somewhere in their information that they appied any monies recieved to the earliest tax year. If so, do I have any recourse for the cost of the levy, etc.?
Thanks.

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How Many State Forms

by Nick
(Santa Monica, CA)

I drew only unemployment in Illinois, moved to California and drew a small income. Do I need to file two state forms, or can I combine to only a California state form since it was government money from Illinois?

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How Much Am I Elligeable For?

by KWESLEY
(Clearwater Florida)

Ok so my question is i'm a single mother with two children and worked half the year paying taxes and half the year on a 1099, so I think my gross income was 10,000 so my question is will I still be elligable for a nice refund with the EIC and the Child tax credit? I normally get about 7500.00?

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How Much Can I Make?

by Sherry
(Sarasota, FL)

I am single mother of one 4year old child that lives at home full time. I am the head of household. The childs father lives with us full time but never had a job, therefore I clothe him and feed him with my money. I was wondering how much money can I make a year and still get an income tax rebate check? so I dont owe the government any money. I live paycheck to paycheck and cant come up with any extra money. Is it based off of gross pay or net pay?

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.

How Much To Report

John installed a new roof on his friend's house in return for a used truck worth $8000. How much income must John report on his tax return for his services?

Click here to post comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Income Tax Questions.


Please subscribe to my monthly newsletter, Bookkeeping Basics E-zine. It tells you every month about the new information that I have added, including some great tips and advice from myself and other Bookkeeping Basics readers.

Enter Your E-mail Address
Enter Your First Name (optional)
Then

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Bookkeeping Basics E-Zine.

Like Bookkeeping-Basics.net?