Ask The Experts: Why Don't We Ever Get a Tax Refund?
I have a tax question. My husband and I both work and have no kids. Our only source of income is our salary, aside from some interest and dividends from investments. We also just rent.
For the past two years, even if we have zero allowances and pay additional withholding tax every paycheck, we always end up owing the IRS some money come tax time. We take one personal exemption each and just the standard deductions on our tax form and file jointly. Are we missing something or doing something wrong? Is it possible to get a tax refund? Thanks!! –Joy
Unfortunately, you're in a situation in which you pay a lot of taxes. Since you don't have any children or deductions related to a home, your tax bill takes a bigger chunk out of your earnings.
You'll have to pay the same total amount of taxes for the year whether you have a little or a lot withheld from your paychecks. If owing money at the end of the year makes you nervous, the only way to fix that is to have even more taken out of each paycheck.
But you're actually doing things the way I like it. Those who get big refunds have essentially let the government use their money (for free!) all year long. Instead, you're using your money all year and paying the balance of what you owe at the end of the year. So long as you can budget enough to pay the tax bill, don't worry!
>>Read previous Ask The Expert posts