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Just put my hubby’s tax info W-2 and 1099-R into TurboTax and it says he owes a dollar. Yes, one dollar to the IRS. While this isn’t much, it does raise a question…
All W-4’s were claimed with a ZERO. I don’t think it puts him in another tax bracket. We file our taxes SEPARATELY since we do best keeping all our finances that way. Is $23k in income somehow a different tax bracket? About $1500 was paid into the IRS.
He did also have a 1099R for a retirement account that was closed out after leaving a job, but full taxes were paid on it as well.
Could someone maybe help me understand why he would be paying in MORE taxes after already having the max taken out?
Thanks a bunch in advance!
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A 1099-R is for a retirement distribution. It is not self-employment. There is an IRS penalty for taking distributions early unless the money was to pay certain things, like a house or medical bills. The IRS penalty is 10% on top of the taxes taken out.
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His is a 1099-R, not a 1099-Misc, so he would not have to pay the self employment income tax (medicare/ss) on that.
He may have to pay a penalty though for taking out his retirement early.
Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.
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They screw you when you file married filing separately.
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You said he had multiple W4’s so that means he had more than one job last year. If you have multiple jobs, a separate withholding form must be filled out for each employer, and none of those forms takes into account what is withheld from the other employer.
2016 Tax brackets:
$0-$9,275 10%
$9,276-$37,650 15%He made $23k a year, which up to $9,275 of his income is taxed at 10% then his income from $9276 to $23k is taxed at 15%.
Random Example: If he had three part time jobs claiming Zero and each job he made $7666, then each job would probably only hold at the 10% rate, leaving you with taxes owed.
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Just because you claim 0 does NOT mean you will have enough tax withheld. Claiming zero is not the max tax you can have withheld by your employer either.
Go to the IRS website and look at line number 6 on the W4 form it says “Additional amount, if any, you want withheld from each paycheck ” People fill in that line when claiming zero is not enough of a withholding.
You should use the IRS withholding calculator to see what he should be claiming. https://www.irs.gov/individuals/irs-withholding-calculator
If he only owes $1 looks like its pretty spot on!
Also the way the tax brackets work is that it is a progressive tax bracket meaning you don’t all of a sudden switch your entire income amount to a higher bracket when you reach it. Just the amount of your income that falls into the higher bracket is taxed at that rate, all the income at the lower bracket is taxed at the lower rate. EG) your first $10000 is taxed at 10%, then from 10001 to 20000 that specific amount is taxed at 15% and so on.
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