Quote:
Originally Posted by jpm1
#1: I work full time and I make $36,000 a year. About 26% of that income is taxed, and my tax return averages around $500 each year. Is this normal?
#2;Or am I being overtaxed? Some of my peers with similar marital statuses and income report a lower tax rate.
Thanks for your help! |
#1;average tax refund for 2008 was nearly $3,400. As an EE, not an self employer or independent contractor, as you can see, your Federal income tax withholding largely depends on the number of allowances that you claim on your W-4 form. Claiming too little in allowances can cause you to overpay taxes n you’d be subject o tex refund . Claiming too many allowances on your W4 can cause you to owe the IRS. If your take-home pay is suffering because you are paying a large amount of income tax, there are ways to reduce it; you need to claim exempt if you qualify for it. You need to submit a new W-4 form showing more allowances. Although the more allowances you claim, the less federal income tax you pay, you should not claim more allowances for which you are entitled. When you file your tax return you must account for each allowance that is claimed. If you claimed an allowance for which you are not entitled, you will end up owing the IRS. Review your current W-4 to ensure that you have claimed all of the allowances to which you are entitled. For example, you can claim an allowance for yourself if no one else can claim you as a dependent. Complete Sections A through G of a new W-4 form and submit it to your employer; your tax may be lower if you and your spouse file a joint return instead of filing separately. To be sure, figure your tax return using both methods then choose the one that gives you and your spouse the lower combined tax.
#2; As mentioned above. You can determine the amount of your refund from the last tax year and divide your refund by 52 to determine your weekly overage. For example, if your refund equals $500, then you are facing a withholding overage of $9.61 per week and divide your withholding overage by 71.15,$.135, the amount of the reduction each allowance provides for weekly pay. The Drawbacks to getting a Large Refund is ;You are loaning your money for a negative return. Getting a large refund means you are paying more in taxes throughout the year. This money could easily be going into your bank account and earning interest throughout the year