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Tax Time!

February 6, 2011

If you talked to me about taxes in the last month, I probably claimed I was getting a refund.  I was wrong.  Booooo!  We owe about $1200 and a $26 underpayment penalty (!).  How did this happen to me!?! !

When we were married, I changed my withholding from Single to Married, 0 exemptions, $50 additional dollars every 2 weeks.   T is withholding at Single, 0 exemptions, and paid (too little) estimated taxes on his consulting income.  We both paid too little federal taxes at about the same percent.  Oooops.

Luckily, I paid way too much in state taxes, and I think I balanced out my federal deficit (but not T’s).  We are getting a refund from California, but it is less than the amount of federal taxes we owe.

T isn’t planning on doing any consulting this year, so this shouldn’t happen again.  Consulting can really get you, because you have to pay your “employer’s half” of payroll taxes.  I think he earned more money than he had thought (a paycheck from last year was applied to 2010 fiscal year), and he also didn’t take into account that marrying me would increase his taxes.  I adjusted my federal withholding, and T will do the same.

I’m getting a bonus this month, and I guess some of it will be going to taxes.  We are in the process of reorganizing (combining) all our cash savings, so I guess this is just $1200 less we’ll have in one of our savings funds.

Did anyone one else have a bad tax surprise?  Or am I the only one?!  Pleeeeease don’t tell me about your good tax surprises, I might die of jealousy!  Just kidding.  Sort of.  🙂

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8 Comments leave one →
  1. February 7, 2011 7:38 am

    SP, I’m so sorry that you got this nasty surprise. To look on the bright side, you corrected the problem so you won’t have it again next year. I didn’t know that there was such a difference between single and married for taxes.

  2. February 7, 2011 11:48 am

    I once owed $3000 (yes, three thousand) when I worked on contract and didn’t have the taxes deducted.

    That was painful.

  3. February 7, 2011 12:25 pm

    Sorry about your bad surprise. I was hoping I would get some refund too after paying a whopping amount in taxes but sadly I got a bad surprise too. I owe the Feds $11 tho not as bad as yours but still it sucks that I still need to pay.

  4. February 7, 2011 12:47 pm

    That sucks! I have to pay this year (first time ever) but have been expecting that for a few months – it kinda makes it sting a bit less. Thankfully, I have student loan interest to deduct, as that took me down from 1200 to 700 or so.
    I want to get rid of the loans, but ugh, more taxes in return for it? No thanks!

  5. February 7, 2011 6:00 pm

    Yes, this has happened to me too. We owed a little over 4,000 last year! OUCH. I am hoping that we do not owe this year. At least you already know the damage and have a few months to figure out the best way to pay it and when.

  6. Angela permalink
    February 7, 2011 6:56 pm

    I got married last year and changed my tax deductions to married with 1. It was single with 1 when I was single. I owing now owe money. I do not understand how if I tell my employer that I am married and to take money out as such, why I now owe money. It doesn’t make sense to me. Why have it as an option if they don’t take out enough money?

  7. February 16, 2011 4:37 pm

    I love your blog! Ugh. I just did my taxes too and it turns out we owe for the first time! We just got married so I changed my withholding to married and apparently that didn’t help. In addition, I took a 401K withdrawal this year and they did not hold back enough taxes, so all in all, we’ll owe about $7K! That’s right, $7K. Disgusting, I know : (

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