Tax question

deftron

Lifer
Nov 17, 2000
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Are you only allowed to get back what you paid in taxes ?


I have about $1,250 in Hope credit .. but I only paid $933 in Federal Tax

I'm using TaxCut program and it says my refund is $933


Last year, I thought I got more back than I paid...was using TurboTax then




 

deftron

Lifer
Nov 17, 2000
10,868
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Hm.. I coulda sworn I got all my tuition back last year.

Oh well.


Another curiousity though.

Found my last year W2's, had 10% taken out for Federal taxes

This year, I only had 6% taken out. I didn't change the number of dependents or anything. YOu thik my employer messed up my W2 ?
 

coolred

Diamond Member
Nov 12, 2001
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No, you cannot get more money back than you paid in Taxes.

Thats not entirely true. I got back more then I paid in since i qualified for the EITC. It ended up giving me back an extra 2506.00 then i paid in.
 

deftron

Lifer
Nov 17, 2000
10,868
1
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Oh.. I htink I qualified for the EITC last year... that's why.


That's when you make less than $11,000 right ?


Damn.. why did Ihave to go just a little over this year
 

coolred

Diamond Member
Nov 12, 2001
4,911
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Not sure if that is the exact dollar amount, but yeah something like that, the amount increase by about 10,000 for having 1 child and another 10,000 for having 2 children. If you don't have any dependant children then you must be 25 or over to qualify I think.
 

dullard

Elite Member
May 21, 2001
25,898
4,485
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You can get more back than you paid in - but this works only if you have the earned income credit.

Everyones W2s should be different from last year. There are two reasons for that.

(1) The easy reason to explain is that the tax was cut. Obviously the tax cut didn't help you at all, since you didn't pay taxes last year or this year. But that is one reason why you paid in less during the year.

(2) The second reason is harder to explain and doesn't apply to everyone. There isn't a simple formula like taking 10% out for each paycheck. The formula is much more complicated than that. The first couple hundred dollars don't have anything taken out. Any income earned after that is taxed at an accelerating rate. This accelerating rate isn't accelerating smoothly either (since some taxes like social security and medicare only are taxed on the first $80,000 or so income, so what you earn above that level has less taxes). This accelerating tax withholding means that if you are paid $500 and then $500, your employer will take out a lot less tax than if you got one check for $1000. How did this affect a lot of people? Last year had 53 business weeks, which happens every 7 years. Suppose you are supposed to be paid $52000 per year - which is usually paid out $1000 per month. If your employeer was smart, s/he would have noticed that last year had 53 paychecks, so you should have been paid $981.13 each week for you to still earn the $52000 salary. If your employeer wasn't smart, s/he would have paid 53 checks for $1000 each resulting in the employees earning $1000 more than the contract said. What does this have to do with tax withholdings? Like I said the amount withheld isn't linear, so with different earnings per paycheck, the withholding is not the same.