U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > California
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
 
Old 01-20-2008, 01:38 PM
 
1,831 posts, read 4,707,779 times
Reputation: 661

Advertisements

I just got done doing our preliminary taxes since our income went up quite a bit this year ... and I was worried about the tax hit.

Funny thing happened ... we're actually getting a small refund from the fed but ... we actually owe the state money.

I guess our state withholding was based on individual incomes but, when our incomes are combined the state takes a bigger pound of flesh.

Usually our federal would track with the state but, not this time. I guess the California tax hit substantially increases as you make more money.

Has this happened to you?

Last edited by sheri257; 01-20-2008 at 01:49 PM..
Quick reply to this message

 
Old 01-20-2008, 02:43 PM
 
11,715 posts, read 35,037,557 times
Reputation: 7466
Its pretty typical for your California withholding to leave you with a small amount owed at the end of the year even if the Feds give you a refund. California's tax rates are VERY progressive. I found that out a few years ago when my income went up significantly from one year to the next. It was like my income went up 50% but my California tax went up 150%. Isn't that fun?
Quick reply to this message
 
Old 01-20-2008, 03:14 PM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 80,819,690 times
Reputation: 17413
Quote:
Originally Posted by sheri257 View Post
. we're actually getting a small refund from the fed but ... we actually owe the state money.
Too bad you're getting a refund. You just gave the government an interest free load. Consider fine tuning your exemptions such that you owe the maximum amount without incurring a penalty.
Quick reply to this message
 
Old 01-20-2008, 05:52 PM
 
1,831 posts, read 4,707,779 times
Reputation: 661
Has anyone avoided the additional state taxes by going the "married ... but filing separately" route?

I remember reading that it can be advantageous in some cases. I'm wondering if this is one of them.
Quick reply to this message
 
Old 01-20-2008, 08:30 PM
 
566 posts, read 1,704,733 times
Reputation: 322
As Charles pointed out having your employer withhold more taxes than you owe is like making a free loan to the government. Keep the money and earn interest on it then pay your tax bill when it comes due. That is unless you have no self control whatsoever. Then maybe the free loan to the government works for you.
Quick reply to this message
 
Old 01-21-2008, 04:48 AM
 
1,831 posts, read 4,707,779 times
Reputation: 661
I guess you guys missed the part where I said "small" refund. The fed refund isn't large ... only $200 so ... It's not like I was giving a huge loan to the government.

On the other hand, I owe about $1,000 to the state so ... I'm not sure why you guys are obsessing on the refund and this so called free loan to the government when, overall, I still owe money.

We did zero out our exemptions because we knew we'd be in a higher tax bracket (which is going to be even higher this year ...)

And because I didn't want a huge tax bill at the end of the year. You seem to be forgetting that there can be penalties and interest for significantly underpaying what's owed ... so that can cost you also.

The question I'm really trying to answer here is .... what have people done to reduce the state tax hit at higher income levels? Does married filing separately help ... or something else?

Last edited by sheri257; 01-21-2008 at 05:44 AM..
Quick reply to this message
 
Old 01-21-2008, 08:54 AM
 
Location: Las Flores, Orange County, CA
26,346 posts, read 80,819,690 times
Reputation: 17413
Quote:
Originally Posted by sheri257 View Post

The question I'm really trying to answer here is .... what have people done to reduce the state tax hit at higher income levels? Does married filing separately help ... or something else?

I use Turbo Tax. I am pretty sure (but not 100%) that it figures out the best method of filing given your circumstances. For us (I have income, wife doesn't) filing joint is the best way. But consider Turbo Tax. If you have simple income (no businesses, rental property, etc) then it is really neat.
Quick reply to this message
 
Old 01-21-2008, 12:43 PM
 
Location: Rolando, San Diego CA 92115
8,149 posts, read 25,651,356 times
Reputation: 4166
CA's income tax graduations are much lower than the federal government:

For single and married filing separately taxpayers:
-- 1% on the first $6,622 of taxable income
-- 2% on taxable income between $6,623 and $15,698
-- 4% on taxable income between $15,699 and $24,776
-- 6% on taxable income between $24,777 and $34,394
-- 8% on taxable income between $34,395 and $43,467
-- 9.3% on taxable income of $43,468 and above.


Not much you can do to avoid it, just the general stuff to lower your taxable income
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


 
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Options
X
Data:
Loading data...
Based on 2000-2016 data
Loading data...

123
Hide US histogram

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > California
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top