is my mom full of crap?

[Scrapster]

My mom says that the government takes out more taxes if you have a job that makes tips. She said last year she completed her taxes and her refund was supposed to be approx. $1100, BUT she only received a $600.00 refund. She says this was b/c she put down "stylist" for her occupation and that the government takes away part of your refund if you have a job that accepts tips and you don't claim them on your tax form.

Now this year, our gross incomes only have a difference of $1000 (both incomes less than 10k) but she is expecting an $1100 refund while I just got my taxes done at H&R and am getting back $400. We filled out the same exact form, she is divorced and filed as a single person, I'm single as well. At her job she doesn't have any dependents, while I claim myself as a dependent (i don't know how that affects your taxes).

So my question. Is my mom full of sh1t?

 

[Scrapster]

bump^

 

[WetSprocket]

I'm no tax expert but I think if you claim one dependent they dont take out as much per pay period therefore when you do your taxes you don't get back as much. You would still pay the same amount but by declaring zero dependents you get that extra back in a refund.

 

[woodie1]

She is correct. If the IRS feels you don't include enough tips for your income they will estimate the tips and tax you accordingly.

 

[Noriaki]

Yup.

You have to claim your tips, and if you don't the nice tax men will estimate tips for you.

 

[Scrapster]

Damn. $600 though? I'm still a little confused why our incomes are practically identical and I get the $400 refund compared to her $1100 return.

 

[Vikaden]

cause you claimed 1 on W-4, if you claim 0 you will get more back cause they took too much out during the year

 

[woodie1]

Instead of looking at the refund look at how much each of you paid. She could have had more withheld than you.

 

[jcballer1]

she is not full of crap... must claim everything

 

[MojoJojo]

Getting tips sucks when Uncle Sam finds out.

 

[Double Trouble]

If you're in a job where tips are common, you should always report at least some percentage of tips -- and at the very least, keep some sort of record as to how much you've received in tips.

If you don't report tips, they IRS terrorists will estimate them for you... If you keep a good record of what your tips are and their estimate is too high, you can amend your filing to include the tip amount.

Don't be concerned about "what you get back" -- that's not really money you're receiving, it's the amount of money you payed during the year that you shouldn't have -- in other words, you gave the government a free loan.