Why did i get so little on my tax refund?

Why did i get so little on my tax refund?

Postby averell » Sat Jan 29, 2011 8:53 pm

I got 1,500 back on my tax refund, but had $4,000 taken off on my checks for taxes.

Ive gotten a new job from last year and made TWICE as much but only got a refund difference of a few hundred dollars vs my last job...did i do something wrong?

I realized that on my new job, i must of claimed 1 percent because in field d, it says 10, so when i saw that i assumed that maybe that was the reason i got so little, but a lot of people of my friends are still saying i should of gotten more, is this true? I was expecting more...please let me know

i also did my taxes on my own, ive been doing this for years and has always been getting back what was taken out of my taxes, so idk why this year is different, i dont expect 4,000 but definitely not 1,500
averell
 
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Why did i get so little on my tax refund?

Postby drystan » Sat Jan 29, 2011 8:58 pm

The key is probably that you made more money this year which may have bumped you up into the next tax bracket. Taxes in the US are progressive, the more you make, the more you pay as a percentage of your income. If you made as an AGI $30,000 or more last year, having a tax liability of $2,500 is probably correct ($4,000 paid in - $1,500 back)
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Why did i get so little on my tax refund?

Postby medwin » Sat Jan 29, 2011 9:02 pm

Apparently, a lot of your friends are not very bright! But there IS still hope for you!

Your "tax refund" is the money you OVERPAID towards taxes by having too much deducted from your pay-checks.....getting a big refund means you just made an "interest-free" loan to the IRS, which is dumb...

When you took the job, you filled out a W-4 form (and YOU chose what to put on it!) that determined how much your employer took out of each check to go towards you tax bill.....IDEALLY, if you did that right, you would end up getting no refund at all, and perhaps even owing a few dollars, since that would mean YOU had gotten all the money you earned straight away, instead of lending it to the Tax Office! Getting a big refund might SEEM like a good thing, but it really just means you will likely never understand finance well enough to be wealthy...
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Why did i get so little on my tax refund?

Postby kendrik94 » Sat Jan 29, 2011 9:08 pm

You made more, so you owed more tax - that means they keep more of what you paid in.

I don't think you understand what a refund is. It's just returning any overpayment of what you had withheld. You calculate your tax for the year, then compare it to your federal withholding. If you had too much withheld, the over payment is refunded. If not enough was withheld, you get no refund and have to pay in the extra.
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Why did i get so little on my tax refund?

Postby dewey » Sat Jan 29, 2011 9:12 pm

So little?? Hell, $1,500 is WAY too much! That $1,500 refund is costing you $30 every week in reduced take-home pay.

A tax refund is just change back for an overpayment. It's no different than buying something for $5 at Wally World and giving the cashier a $20. You get $15 change. If they told you that you'd have to wait 15 months for your change, you'd go POSTAL and you know it. Why then is it OK for the government to do the same thing to you??

Want a $6,700 refund next year? File a new W-4 and tell them to withhold an extra $100 per week for federal income tax. Ba-Da-Bing! $6,700 refund. Of course you'll have $100 less per week in your take home pay. Not a good idea? Didn't think so!

A much smarter move would be to file a new W-4 and bump up the number of allowances by 2 compared to what you are claiming now. You'll get any extra $30 per week in your paycheck but next year you will be very close to breaking even at tax time.
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