2013 tax filing issues

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hulio82
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2013 tax filing issues

Post by hulio82 »

i was filing my 2013 taxes using TurboTax and after plugging everything in, it showed that i owed around 8K. This really caught us by surprise and i'm trying to figure out if there are any ways i can lower this? i've provided some high level information. please let me know if you need more info.

Overview :
  • We live in TX and make 169K combined ( 103K his + 66 hers)
    Our calculated MAGI is 155K
    We purchased a home in 2013 and our mortgage interest for 2013 (per 1098) was $3974
    Property taxes were around $1780
Questions
1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
2. What, if anything, can i do to lower my tax liability? (I'm not trying to dodge paying taxes. they are inevitable. just trying to see what i can do to lower it)
3. We donated a bunch of stuff in 2013 while moving out of our apartment to goodwill, but don't think we got receipts. Any way we can claim deductions for this without having a receipt(s)?
4. Does it matter if we file as married- jointly vs married separated?
Last edited by hulio82 on Mon Mar 17, 2014 10:44 am, edited 1 time in total.
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House Blend
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Re: 2013 tax filing issues

Post by House Blend »

1. No, you're thinking about the limit for making Roth IRA contributions. The deductiblility threshold for an IRA is much lower.

2. Probably not.

3. Not something I would do. Read the instructions for Schedule A to see the documentation requirements for claiming non-cash donations.

4. Almost certainly you'll want to file MFJ.
mlipps
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Re: 2013 tax filing issues

Post by mlipps »

Did you just get married or drastically change your W-4 this year? $8k is a crazy amount to owe.
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grabiner
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Re: 2013 tax filing issues

Post by grabiner »

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
$178K is the limit for making direct contributions to a Roth IRA; you are below that limit, so you can contribute to a Roth IRA for 2013, but it won't lower your taxes.

$115K is the limit for making deductible contributions to a Traditional IRA if you are covered by an employer plan. (If one of you is not covered, he or she can make a deductible contribution but the other spouse cannot.)
2. What, if anything, can i do to lower my tax liability? (I'm not trying to dodge paying taxes. they are inevitable. just trying to see what i can do to lower it)
You can't do anything now; you owed these taxes as soon as you earned the money. You can tell your employer how much to withhold to pay taxes in advance, but you must pay the difference in April, and if you don't have enough withheld, you may owe a penalty. You can avoid having a big tax bill next year if you file W-4 forms with your employer with fewer withholding allowances.
3. We donated a bunch of stuff in 2013 while moving out of our apartment to goodwill, but don't think we got receipts. Any way we can claim deductions for this without having a receipt(s)?
You need a record of your charitable donations, but given the information you reported, even deducting it wouldn't help you; your itemized deductions are less than the standard deduction. (And this is part of the reason for your unexpectedly high tax bill; you aren't getting a tax benefit from deducting the mortgage interest, because you don't have other deductions such as state income tax.)
4. Does it matter if we file as married- jointly vs married separated?
You'll have to check it out, but it is likely that you will pay more filing separately.
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celia
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Re: 2013 tax filing issues

Post by celia »

Since you were so surprised to see how much you owe, may I suggest that you compare this tax return with last year's (line by line on the printed returns)? Were you married both years with similar numbers both years? If you see where the numbers differ a lot from last year, see if you may have made a mistake during your data entry.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

mlipps wrote:Did you just get married or drastically change your W-4 this year? $8k is a crazy amount to owe.
Got married in 2011. I looked into it more and i guess what happened is that my wife got a job in late 2012 and i just forgot to update my W4 to reflect the right # of allowances..i had mine set to 4 for federal which even i'm wondering why i would have it set so high even if she did not have a job. regardless, i'll probably set mine to 0 just to catch up fro a little bit.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

celia wrote:Since you were so surprised to see how much you owe, may I suggest that you compare this tax return with last year's (line by line on the printed returns)? Were you married both years with similar numbers both years? If you see where the numbers differ a lot from last year, see if you may have made a mistake during your data entry.
i did compare it to the prior years return, but my wife wasn't employed the whole year in 2012 so that's why we didn't have to pay back much.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

just for my curiosity- since i was witholding a lot, was i penalized? for example- out of the 8K i owe them, is any part of it a fee?
earlyout
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Re: 2013 tax filing issues

Post by earlyout »

A penalty will be shown on line 77 or your form 1040. What does it show?
Sidney
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Re: 2013 tax filing issues

Post by Sidney »

hulio82 wrote:just for my curiosity- since i was witholding a lot, was i penalized? for example- out of the 8K i owe them, is any part of it a fee?
It will be shown on Line 77 if there is an estimated penalty.
I always wanted to be a procrastinator.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

earlyout wrote:A penalty will be shown on line 77 or your form 1040. What does it show?
I just checked by 1040 and its blank- was not populated. so i'm guessing nothing
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samsoes
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Re: 2013 tax filing issues

Post by samsoes »

If at least the "total tax" amount from your 2012 return was withheld by your employers in 2013, there won't be any penalty. Essentially it's a one-year grace.
Last edited by samsoes on Mon Mar 17, 2014 9:10 am, edited 1 time in total.
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sscritic
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Re: 2013 tax filing issues

Post by sscritic »

If you have tax software that allows you to look at forms, open Form 2210, Underpayment of Estimated Tax. By reading the lines, you will see where you hit the "stop, you don't owe a penalty" notice.
Bob's not my name
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Re: 2013 tax filing issues

Post by Bob's not my name »

hulio82 wrote:We make 164K combined ( 98 his + 66 hers)
Our calculated MAGI is 155K

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
1. You are correct that the 2013 phaseout for deductible contributions to a spousal TIRA is $178,000 - $188,000 MAGI. If one of you is not covered by an employer plan the non-covered spouse can make a fully deductible maximum contribution ($5,500 if under 50) to a TIRA and cut your tax bill by $1,375. If neither of you is covered by an employer plan then you can both make deductible TIRA contributions and cut your tax bill by $2,750.

2. Why is your MAGI so close to your gross income? It looks like neither of you contributed to an employer plan like a 401k, or at least you contributed very little. Typically your AGI would be several thousand dollars less than your gross earnings solely due to pre-tax health, dental, and disability insurance premiums and FSA/HSA contributions withheld from your pay. If you were both maxing 401k's your AGI would be about $40,000 less than your gross income.
JW-Retired
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Re: 2013 tax filing issues

Post by JW-Retired »

hulio82,
Can you tell us how much your total taxable income and total taxes are (lines 43 and 44 on your 1040) so we can see if they make sense? How much extra you owe doesn't give us anything to sanity check.

Since TX has no state income tax I'm doubting that you will have enough itemized deductions to exceed your standard deduction ($12,200 for MFJ). If that's true no point in worrying about donation receipts.
JW
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Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

sscritic wrote:If you have tax software that allows you to look at forms, open Form 2210, Underpayment of Estimated Tax. By reading the lines, you will see where you hit the "stop, you don't owe a penalty" notice.
thanks! will look into that this evening. when i did go through turbo tax- the usual walkthrough, it didn't prompt me about a tax penalty. but i will double check.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

Bob's not my name wrote:
hulio82 wrote:We make 164K combined ( 98 his + 66 hers)
Our calculated MAGI is 155K

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
1. You are correct that the 2013 phaseout for deductible contributions to a spousal TIRA is $178,000 - $188,000 MAGI. If one of you is not covered by an employer plan the non-covered spouse can make a fully deductible maximum contribution ($5,500 if under 50) to a TIRA and cut your tax bill by $1,375. If neither of you is covered by an employer plan then you can both make deductible TIRA contributions and cut your tax bill by $2,750.

We both are covered by a employer plan

2. Why is your MAGI so close to your gross income? It looks like neither of you contributed to an employer plan like a 401k, or at least you contributed very little. Typically your AGI would be several thousand dollars less than your gross earnings solely due to pre-tax health, dental, and disability insurance premiums and FSA/HSA contributions withheld from your pay. If you were both maxing 401k's your AGI would be about $40,000 less than your gross income.
the only reason i can think of is becuase i took 4 allowances for federal on my w4. My wife claimed 0.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

JW Nearly Retired wrote:hulio82,
Can you tell us how much your total taxable income and total taxes are (lines 43 and 44 on your 1040) so we can see if they make sense? How much extra you owe doesn't give us anything to sanity check.

Since TX has no state income tax I'm doubting that you will have enough itemized deductions to exceed your standard deduction ($12,200 for MFJ). If that's true no point in worrying about donation receipts.
JW
Line 43- $135,518
Line 44- $ 25,737
sscritic
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Re: 2013 tax filing issues

Post by sscritic »

hulio82 wrote:
sscritic wrote:If you have tax software that allows you to look at forms, open Form 2210, Underpayment of Estimated Tax. By reading the lines, you will see where you hit the "stop, you don't owe a penalty" notice.
thanks! will look into that this evening. when i did go through turbo tax- the usual walkthrough, it didn't prompt me about a tax penalty. but i will double check.
It didn't prompt because you don't owe. The form will just help you understand why.
Bob's not my name
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Re: 2013 tax filing issues

Post by Bob's not my name »

hulio82 wrote:
Bob's not my name wrote:
hulio82 wrote:We make 164K combined ( 98 his + 66 hers)
Our calculated MAGI is 155K

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
1. You are correct that the 2013 phaseout for deductible contributions to a spousal TIRA is $178,000 - $188,000 MAGI. If one of you is not covered by an employer plan the non-covered spouse can make a fully deductible maximum contribution ($5,500 if under 50) to a TIRA and cut your tax bill by $1,375. If neither of you is covered by an employer plan then you can both make deductible TIRA contributions and cut your tax bill by $2,750.

We both are covered by a employer plan

2. Why is your MAGI so close to your gross income? It looks like neither of you contributed to an employer plan like a 401k, or at least you contributed very little. Typically your AGI would be several thousand dollars less than your gross earnings solely due to pre-tax health, dental, and disability insurance premiums and FSA/HSA contributions withheld from your pay. If you were both maxing 401k's your AGI would be about $40,000 less than your gross income.
the only reason i can think of is becuase i took 4 allowances for federal on my w4. My wife claimed 0.
That has nothing to do with your MAGI. The issue appears to be that you and your wife contributed very little to your 401k's. Contribute more in 2014.
sscritic
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Re: 2013 tax filing issues

Post by sscritic »

Bob's not my name wrote: The issue appears to be that you and your wife contributed very little to your 401k's. Contribute more in 2014.
Wild guess. Government employees with a defined benefit plan who have never opened a supplemental 403(b) or 457.
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frugaltype
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Re: 2013 tax filing issues

Post by frugaltype »

See, this is one of the reasons I do my taxes by hand. Then if something changes in my universe, I know if it will affect my taxes or not, and adjust things accordingly.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

Bob's not my name wrote:
hulio82 wrote:
Bob's not my name wrote:
hulio82 wrote:We make 164K combined ( 98 his + 66 hers)
Our calculated MAGI is 155K

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
1. You are correct that the 2013 phaseout for deductible contributions to a spousal TIRA is $178,000 - $188,000 MAGI. If one of you is not covered by an employer plan the non-covered spouse can make a fully deductible maximum contribution ($5,500 if under 50) to a TIRA and cut your tax bill by $1,375. If neither of you is covered by an employer plan then you can both make deductible TIRA contributions and cut your tax bill by $2,750.

We both are covered by a employer plan

2. Why is your MAGI so close to your gross income? It looks like neither of you contributed to an employer plan like a 401k, or at least you contributed very little. Typically your AGI would be several thousand dollars less than your gross earnings solely due to pre-tax health, dental, and disability insurance premiums and FSA/HSA contributions withheld from your pay. If you were both maxing 401k's your AGI would be about $40,000 less than your gross income.
the only reason i can think of is becuase i took 4 allowances for federal on my w4. My wife claimed 0.
That has nothing to do with your MAGI. The issue appears to be that you and your wife contributed very little to your 401k's.
I see. we're both doing the the minimum to meet the employer match (6%). since i'm getting more into investing, i do plan on reviewing my options as far as opening an IRA and maxing out my 401K.
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hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

sscritic wrote:
Bob's not my name wrote: The issue appears to be that you and your wife contributed very little to your 401k's. Contribute more in 2014.
Wild guess. Government employees with a defined benefit plan who have never opened a supplemental 403(b) or 457.
No. both are in the private sector.
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hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

frugaltype wrote:See, this is one of the reasons I do my taxes by hand. Then if something changes in my universe, I know if it will affect my taxes or not, and adjust things accordingly.
Agreed! wish i spent more time in the past trying to figure out taxes and just do them on my own.
JW-Retired
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Re: 2013 tax filing issues

Post by JW-Retired »

hulio82 wrote:
JW Nearly Retired wrote:hulio82,
Can you tell us how much your total taxable income and total taxes are (lines 43 and 44 on your 1040) so we can see if they make sense? How much extra you owe doesn't give us anything to sanity check.

Since TX has no state income tax I'm doubting that you will have enough itemized deductions to exceed your standard deduction ($12,200 for MFJ). If that's true no point in worrying about donation receipts.
JW
Line 43- $135,518
Line 44- $ 25,737
That checks with a $155.5k AGI & the MFJ std deduction/exemption of $20k. Nothing much you can do about it except do more pre-tax 401k/403b/457 type retirement saving.
JW
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Bob's not my name
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Re: 2013 tax filing issues

Post by Bob's not my name »

hulio82 wrote:
Bob's not my name wrote:
hulio82 wrote:
Bob's not my name wrote:
hulio82 wrote:We make 164K combined ( 98 his + 66 hers)
Our calculated MAGI is 155K

1. I was planning on opening a Trad IRA to lower our tax liability but TurboTax stated that we make too much (>115K). i thought the limit was >178K or in that area for claiming a full/partial deduction?
1. You are correct that the 2013 phaseout for deductible contributions to a spousal TIRA is $178,000 - $188,000 MAGI. If one of you is not covered by an employer plan the non-covered spouse can make a fully deductible maximum contribution ($5,500 if under 50) to a TIRA and cut your tax bill by $1,375. If neither of you is covered by an employer plan then you can both make deductible TIRA contributions and cut your tax bill by $2,750.

We both are covered by a employer plan

2. Why is your MAGI so close to your gross income? It looks like neither of you contributed to an employer plan like a 401k, or at least you contributed very little. Typically your AGI would be several thousand dollars less than your gross earnings solely due to pre-tax health, dental, and disability insurance premiums and FSA/HSA contributions withheld from your pay. If you were both maxing 401k's your AGI would be about $40,000 less than your gross income.
the only reason i can think of is becuase i took 4 allowances for federal on my w4. My wife claimed 0.
That has nothing to do with your MAGI. The issue appears to be that you and your wife contributed very little to your 401k's.
I see. we're both doing the the minimum to meet the employer match (6%). since i'm getting more into investing, i do plan on reviewing my options as far as opening an IRA and maxing out my 401K.
6% would be about $10,000. That doesn't jibe with your gross/MAGI numbers.
TravelforFun
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Re: 2013 tax filing issues

Post by TravelforFun »

On or around April 10, I will mail Uncle Sam a check for $15K and make a note that 2013 was a good year for me.
2cents2
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Re: 2013 tax filing issues

Post by 2cents2 »

hulio82 wrote:
mlipps wrote:Did you just get married or drastically change your W-4 this year? $8k is a crazy amount to owe.
Got married in 2011. I looked into it more and i guess what happened is that my wife got a job in late 2012 and i just forgot to update my W4 to reflect the right # of allowances..i had mine set to 4 for federal which even i'm wondering why i would have it set so high even if she did not have a job. regardless, i'll probably set mine to 0 just to catch up fro a little bit.
I would recommend you go to a website such as
http://www.irs.gov/Individuals/IRS-With ... Calculator
to figure out your withholding for next year (especially if you are going to contribute more to your 401K next year) .

In June, you can recheck the numbers to see If you are on target.
Topic Author
hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

Bob's not my name wrote: 6% would be about $10,000. That doesn't jibe with your gross/MAGI numbers.
Not sure if this makes a difference- corrected my Gross 2013- didn't account in for bonus
His gross: 103K
her gross: 66K
Total: 169K
SamB
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Re: 2013 tax filing issues

Post by SamB »

Maybe I missed it, but I did not see any mention of taxable, dividend and capital gain investment income. These numbers vary of course, but not so much that I cannot increase the withholding to account for them as the year progresses. If you are forced to take a very large distribution in a particular quarter you can just make a Federal and state tax payment in that quarter to account for it. As suggested you need to start maxing out 401K's. Otherwise your tax rate is going to be very high.
And you have to be meticulous about documenting charitable contributions. If medical expenses are big because of dental or other medical issues including LTC insurance premiums, etc. you might consider beginning to gather the receipts every year just in case you breach the limit for a partial deduction.
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hulio82
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Re: 2013 tax filing issues

Post by hulio82 »

SamB wrote:Maybe I missed it, but I did not see any mention of taxable, dividend and capital gain investment income
I got $80 back from a savings interest account, but that' about it. No other investment income.
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Re: 2013 tax filing issues

Post by placeholder »

frugaltype wrote:See, this is one of the reasons I do my taxes by hand. Then if something changes in my universe, I know if it will affect my taxes or not, and adjust things accordingly.
I spent many years doing taxes by hand which is why I use tax software now.
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celia
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Re: 2013 tax filing issues

Post by celia »

placeholder wrote:
frugaltype wrote:See, this is one of the reasons I do my taxes by hand. Then if something changes in my universe, I know if it will affect my taxes or not, and adjust things accordingly.
I spent many years doing taxes by hand which is why I use tax software now.
I think tax software is great for playing around with "what if" scenarios before you actually buy/invest in whatever you are considering. Remember to always use a COPY of your latest return so you maintain your official return.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.
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