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Thread: Income tax question

  1. #1
    I'm on a MAC! graphic-er's Avatar
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    Jan 2010

    Default Income tax question

    Hello. Could use some advice on a tax return issue I've run into.

    I got married last year and now has come time to file taxes. I use turbo tax. My own income has increased this past year by about 15% and my wife's has stayed roughly the same. Combining our 2 incomes in joint filing has us only a paltry amount over the 15% bracket, meaning 99.9% of our income is in the 15% bracket. We were both in the 15% bracket as single filers last year. So our bracket has not really changed, our deductions and credits haven't really changed either (mortgage interest, student loans interest, no kids). Yet we are getting back way less than we did as single filers last year. I would think we would get more back just based on the fact my income went back up by 15%, more income means more taxes withheld, which should mean higher return as well. The only real difference this year is that the $11900 standard deduction is more than our itemizations. My wife does not contribute much to the itemization compared to When I was a single filer, my mortgage interest always put me above the standard deduction.

    I was under the impression that the so called Marriage penalty did not really exist in the 15% bracket. Is this normal to get less back as a joint filing? Both of us still have our W-4's set as Single as we did not bother to change those.
    Last edited by graphic-er; 04-04-2013 at 12:26 AM.
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  2. #2
    Fatman the Malevolent
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    Dec 2008
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    Default Re: Income tax question

    Make sure your filing status is Married Filing Jointly. In the tax business we like to say "MFS (Married Filing Seperately) is SOL" because that is the worst possible filing status due to virtually every common beneficial refundable credit is not permitted or is reduced for MFS filers.

    Did either or both of you qualify for earned income credit last year? Or, did both of you live seperately and both file Head of Household? It is possible that your combined incomes have increased enough to reduce the amount refund the two of you are now receiving just from earned income credit that it more than offset the additional withholding.

    Also, look into the education credits you might have been eligible for previously that may have changed as a result of the new laws which resulted from the fiscal cliff debacle. There is both an American Opportunity Credit and a Lifetime Learning credit which may either not apply to you if either of you are no longer students, or may have been reduced for your situation.

    If you have not done so, try creating an additional return for the two of you (which you will never send in) showing the two of you married filing jointly and all of the previous tax year income and itemizations that had been shown on both of your returns in the software for the 2012 tax year (not 2011). The act of recreating last year's return in this year's software may lead you to discover something you may be forgetting. It may also show you why your refund is reduced so much.

    Or, you could go to a tax professional with both last year's returns for the two of you (you would need to go together for Privacy Act reasons to discuss her returns prior to you being married) as well as the information for the 2012 tax year and have them do a review and give you an estimate for preparation of this year's return. Most would also be happy to review your current year return prior to you filing it if you have it basically complete without having actually filed it as well.

    At any reputable professional's office this should be done free of charge in hopes of winning your future business, even during the end of season crush that is beginning to happen. If you can do so today or tomorrow, you will beat the worst of the rush. If you don't think you can, and especially since it sounds like you don't owe taxes, you may consider filing an extension using Turbo Tax and then going to a professional for the review as I suggested earlier after the 15th when everybody is done with season. The open hours of reputable offices reduce significantly, but most of us are happy to set appointments.

    Hope this helps you.

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