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warning RANT Taxes

post #1 of 9
Thread Starter 
I just started on my taxes ...

I am under the poverty leval in some areas ... I made less than half of the median income around here... Yet somehow I owe both state and federal almost 400 bucks..

Sorry this just dont make sence ...
post #2 of 9
I know what you're refering to. How many deductions do you have on your W-2's? If you're single, rent and have no dependents, then you only need one. i found that having two deductions on mine made me owe so much money, despite hovering below poverty level. If you're not sure what to do, talk to your HR rep at work. I don't remember what all the deduction reasons are, but I cut mine back to one deduction. Because no one can claim me as a dependent. I had checked another one on one of my W-2's... thinking it made sense to me. yeah... I was in for a shock. I changed it immediately.

i don't know about if you own your home, or are married or have kids... since I've never been in any of those circumstances. But talk to your HR rep.

You can't change what you now owe, but you can change your 2006 W-2 status ASAP. As for what you owe, you don't have to send them all of it. Send them what you can, say $50, if you can swing it. They'll eventually send you a bill... you just keep sending them a little bit whenever possible. I know... it's maddening.

post #3 of 9

Yeah, I accidentally claimed 2 all year once and had to pay back $1,200. I claim 2 half the year and 0 the rest of the year....
post #4 of 9
Thread Starter 
I have zero at one and one at the other..I would talk to HR but none of my jobs have an office for about1000 miles..I work out of my home... my killer is the independant contractor work ... nearly 4000 without any taken out...

I may have to send a bit and pay intrest .. anyone know the IRS interest rate??
post #5 of 9
Just remember that your payment isn't due until the last day to file taxes. That will give you some time to save up. Last year I owed about $400, and only made $13,000. I accidentally claimed two, I have no idea how I did that or why. I barely make enough to cover rent, let alone to owe taxes. I fixed the claim thing immediately and managed to claim my educational expenses, so I actually got $200 back in taxes because I had paid for a class out of my own pocket. There may be other exemptions for you as well, such as driving. I can claim the miles I spend driving to class (it's two and a half hours one way). If you work out of a home office you can claim supplies as well. Buy one of the nicer online tax preparations, like Turbotax or H&R Block and you might be suprised how much they can help you save.
post #6 of 9
You can also file for an extension, which usually gives you about two extra months to pay. Call the IRS and visit their website.. irs.gov
post #7 of 9
Check into the Earned Income Tax Credit. You may qualify if you are close to the poverty level.

Next year, it would be a good idea to set aside 10-15% of each independent contractor paycheck up front to cover taxes. You can research whether you'd be better off sending it to the IRS every couple of months or hanging on to it in a savings account in the interim.
post #8 of 9
If you can get extra withheld from your paycheck. Because we don't have many deductions we alway have to pay in to the feds-we get a refund from the state. Do you have a state refund?? Get that portion submitted right away. When I was working I had an extra $50/month withheld on my taxes. Hopefully being self employed will help next yr. Can you open a IRA yet this year??
post #9 of 9
Thread Starter 
Thank you for the ideas ... likely I will need an extention... I made a bit to much for earned income ... I will start senting some aside..
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