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I am really new to the workforce, so sorry if this sounds like a really newbie question. I am not sure but I feel like I am paying way too much for tax? If I'm not, then, why the hell do we need pay that much?
This is my 2 weeks pay rate:
Total Earning:*$2,270.76
Taxable Gross:*$2,270.76
Total Deduction:*$621.71
Net Pay:*$1,649.05
Taxes/Deductions
Soc Sec - $140
FEDL Tax - $386.68
AZ State TX - $61.31
Medicare - $32.93
I am paying 28% of my earning on Tax! This is ridicoulous. I am single and I have 0 dependent. I've selected 2.7% Taxable wage? I don't even know what that is.
Anyway, I think I am paying too much... What do you guys think? Is there anything I can do to improve this?
Will I get a lot of them back on Tax Refunds?
Any tips/suggestions? Thanks a lot.
You are allowed to enter as many exemptions as you want on your W-4 form (and you can change the form with your HR department at any time if you've already entered only one exemption), which will give you more take-home pay. If you normally receive a tax refund and do not want to loan the money to the federal government, take it up front. Then when you file, you enter the one exemption, and you break even or possibly owe a little. Many people like getting a refund, which is basically giving the government an interest free loan. I'd rather take it up front, so I enter a couple of exemptions. I usually still get a refund. They take too much out on regular paychecks. Having a really good accountant is also usually worth it when you file (they do not all charge a lot).
Well why stop there. Let's pay for unnecessary wars and people who won't even try to get a job because their fine with welfare.
You act as if 99% of the 28% you paid went for the war lol.
Sounds about right if you didn't do any deductions on your taxes. No you can't deduct any 2014 expenses from 2013 taxes.
What did you use to file? I always use turbotax, a little pricier but it's great at getting all deductions like interest from student loans and so on.
You made close to $60k last year if you worked all year. For a single person that puts you in a higher tax bracket, and if you filed anything higher than 0, you probably owed. A girl I knew filed 3 under exemptions and then was mad she owed. I was like well you got more money back during the YEAR.
Your $600 deductions from your check don't include anything about retirement, that would adjust your income to look lower, it does mine by about $400/check. Of course you'll have less money to take home.
I think you need to read more about how tax works. And I assume that 28% is combined with state as well as federal taxes you pay.
So if you had to pay I'd adjust your claims for this year to 0, you'll have less money during the year, but you'll get a refund.
OR just get married But then your wife will just suck away your money
Accountant here. Now this is a 2013 calculation based on the info you gave. Earning $59K a yr, and filing single on a 1040EZ form, you could get back about $1,860 in your IRS tax return for a full year. You would pay in $387x26= $10,039 to the IRS, but IRS taxes would be $8,173 on a taxable income of $49K ($59K - 10K in deductions).
You can increase your exemptions on your W4 to have a bit less taken out of each paycheck and be closer to breaking even like Enigma777 stated. Looking at the tax tables, it looks like you are claiming Zero exemptions. Changing your exemptions from Zero to One (to count yourself) would give you $38 more per paycheck and cut your refund by about half. If you went up to Two, you would get about $76 more per paycheck, but would owe the IRS some taxes at the end of the year. I would change it to One exemption and then you will get a smaller refund, but won't owe anything if your income does not increase due to any other circumstances.
To take credit for the moving expenses, IF you spent more than your employer reimbursed if they did, you can deduct it on form 1040 and will get back about 15-25% of what you paid for it. This lowers your taxable income so you pay less in taxes.
Now if you really want to save on IRS taxes, get married, have 4 kids (two in college), have a $200K house mortgage and you could pay as little as I did last year, only about 1.7% total on my gross pay.
AZ taxes, I have no idea on that, but I'll have to help my son with his next year since he's working in Phoenix this year.
Good luck and welcome to the ranks of the employed!
The first pay stub you get at your first job is always a shocker. Your 28% sounds about right. If you look at your separate taxes for federal and state, they're taking out at the lowest rates. SS and Medicare make up the rest.
If you get a refund after a full year, you can add an extra exemption to your W-2 to get more pay per month. But only do this if you won't owe tax by doing so, as you might not have enough funds to comfortably pay it. A tax-deferred IRA or 401-K will help, too, if you can afford to sock any money away, which you might not be able to do yet.
Welcome to the joys (?) of adulthood.
I liked ukiyo-e's reply. so witty but true.
OP, this is a right of passage into the working world. When my daughter got her first pay stub in her first job, she came to me asking the same questions.
Accountant here. Now this is a 2013 calculation based on the info you gave. Earning $59K a yr, and filing single on a 1040EZ form, you could get back about $1,860 in your IRS tax return for a full year. You would pay in $387x26= $10,039 to the IRS, but IRS taxes would be $8,173 on a taxable income of $49K ($59K - 10K in deductions).
You can increase your exemptions on your W4 to have a bit less taken out of each paycheck and be closer to breaking even like Enigma777 stated. Looking at the tax tables, it looks like you are claiming Zero exemptions. Changing your exemptions from Zero to One (to count yourself) would give you $38 more per paycheck and cut your refund by about half. If you went up to Two, you would get about $76 more per paycheck, but would owe the IRS some taxes at the end of the year. I would change it to One exemption and then you will get a smaller refund, but won't owe anything if your income does not increase due to any other circumstances.
To take credit for the moving expenses, IF you spent more than your employer reimbursed if they did, you can deduct it on form 1040 and will get back about 15-25% of what you paid for it. This lowers your taxable income so you pay less in taxes.
Now if you really want to save on IRS taxes, get married, have 4 kids (two in college), have a $200K house mortgage and you could pay as little as I did last year, only about 1.7% total on my gross pay.
AZ taxes, I have no idea on that, but I'll have to help my son with his next year since he's working in Phoenix this year.
Good luck and welcome to the ranks of the employed!
Thanks a lot! If you son needs any help in phoenix, let me know well I can't help much anyway since I'm new too but you know what I mean.
My employer did not give me anything. So what you would recommend right now is to change it from 0 to 1. Would that mean overall income, I'll earn more by leaving it at 0 and getting the refund, or by changing it to 1 and getting the half refund, or does it not matter?
Then next tax season, just claim the moving expense and that's the best I could do, correct?
I asked 2 of my friends if they wanted to get married and have 5 kids, sadly both of them said they don't want 5 kids.
Quote:
Originally Posted by lurtsman
PPS. Sorry you don't like the tax bill. It is low relative to other countries. On the upside, you are young enough to not understand taxes and some company saw fit to pay you nearly 60k per year, which boggles my mind a bit given the amount of talent that is available at lower wages. No offense, but there are tons of people that would love to be in your situation.
Thanks for the all your info lurtsman. The reason I don't know anything about tax or much of anything else is because I focused so much on my profession where I never cared about anything else in the world yet. I am 23yr old with a bachelor's degree and 2 companies under my name. My profession is C# Programming, which has high salary anyway. I think 60k is average and what people from my profession starts with. Just wanted to point out that I'm not "lucky", it's the result of hard work and being dedicated to something you love.
What I mean is the tax code is geared towards companies. Presumably to foster entrepreneurship.
A few examples,
Need a computer? Employees can't write off the cost.
Need software? Employees can't write off the cost.
Transportation costs? Employees can't write off the cost unless they itemize, but you need alot of expenses to take advantage of itemizing.
Vacations can't be written off, but a company can have a "corporate retreat" that is fully deductible.
Yes, one of the reasons I wanted to be an entrepreneur - the legal tax advantages - cars/transportation, meals, equipment/devices, office/commercial building, insurance policies, profit sharing... Company even bought a villa for client/executive retreats. There are perks to taking on the risk and work of owning a business.
Hey lycos, could you tell me a little bit more about the company? I have my own software company. It's not doing very good but it earns me $300 a month at least. It's a Micro-ISV company, meaning it's created and ran by me only. Would that count for anything?
You're young and have gotten your feet wet in owning a business. If you want longterm tax advantages and have the right temperament, I'd suggest you explore the possibility of growing your business - especially in our current/future job market. (You may get a few posts now about how many businesses fail...). Why are you not making more profit at your sw co?
well obama sees to it that those who scam welfare get fed by having hard workers support them.
blame obama, the socialist.
Yea OP, welcome to a life where you get to support yourself and others who don't want to work. Then tell me how you feel when they demand more.
My advise is learn about taxes, dry yes but at least you won't vote against your own benefit. Never vote for any politician who runs on raising taxes. A politician that can get away with it will always want more of your money. Never think it's ok to tax the other guy for tomorrow you may wake up to find out you are the other guy.
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But then your wife will just suck away your money 
