Need to pay 10K in taxes

amother

Sun, Mar 02 2014, 1:41 pm

Both dh and I work, and taxes are taken off from each of our paychecks. We were recently told by our accountant that we will need to pay an additional 10 thousand dollars in taxes. We don't have that kind of money lying around, and completely did not expect that we would have to pay such a huge amount in additional taxes. Does it make sense that two working people would have to pay so much in taxes after already paying taxes on each paycheck? Is there anyone here who has to pay that kind of money? All the other years (our combined income was not as high) and we never had to pay anything in addition to what was deducted from our paychecks. This is the first year we have to pay - but this much??

rachel6543

Sun, Mar 02 2014, 1:55 pm

You might want to find another accountant to get a 2nd opinion, or use turbo tax and fill out yourself to double check that your accountant did the taxes correctly. Maybe your accountant made an error? Did you forget to send a form? All deductions taken??

Plus, if you don't have the money around to pay, can't you make some sort of payment plan with the IRS? If you need more time to validate your taxes, maybe you can get an extension?? Doesn't hurt to ask.

Best wishes!!

amother

Sun, Mar 02 2014, 1:55 pm

We have to pay more Sad

Maybe because my husband is self employed but its on top of paying quarterly taxes...

amother

Sun, Mar 02 2014, 1:58 pm

We're paying 50K this year. Your accountant didn't invent a number which makes no sense. There are people paying lots and lots of money for taxes.

That said, you should double check with another accountant, or do it on your own, as the poster above said.

amother

Sun, Mar 02 2014, 1:59 pm

OP
Thank you for your responses.
We're planning on going to another accountant for a second opinion, I'm just completely shocked at the amount we have to pay. Yes, this is after all the deductions.

amother

Sun, Mar 02 2014, 2:01 pm

amother who needs to pay 50K, is that in addition to paying taxes on each paycheck all year?
How much money does one need to make to have to pay that much in taxes after already paying taxes throughout the year?

amother

Sun, Mar 02 2014, 2:03 pm

amother wrote:

No, you're right. We weren't paying with each paycheck. It's the total end of year amount.

OOTBubby

Sun, Mar 02 2014, 2:26 pm

OP, you probably (for the future) need to change the amount that is withheld from your paychecks to prevent this. You can adjust that number each year (consult with your account as to what amount is best for you).

amother

Sun, Mar 02 2014, 2:42 pm

OOTBubby,
You're absolutely right. That's the plan so that we don't get into this mess in the future.

smiledr

Sun, Mar 02 2014, 5:31 pm

I register as a single person so the most money gets deducted from my paycheck bec id rather get a refund than owe money. The first year I was working we got hit w a tax bill for 14 k - that was a nasty surprise. We switched accountants and never had a problem since.

zaq

Sun, Mar 02 2014, 6:22 pm

If your combined income went up significantly but you didn't ask your employer to withhold extra, that may account (oooooh, sorrry about that!) for the unpleasant surprise. Ask your respective employers to withhold extra.

OOTBubby

Sun, Mar 02 2014, 6:55 pm

zaq wrote:

And you should reevaluate the amount of withholding every year so you don't get any nasty surprises.

amother

Sun, Mar 02 2014, 9:46 pm

Regarding changing the amount that's withheld, I realize that now. Unfortunately, I didn't realize that beforehand, especially since so much is already taken off for taxes with each paycheck from both my dh's and mine paychecks. I guess not enough was taken off..I don't know. How do employers decide how much should be taken off for taxes? I thought it was a set amount based on one's salary. It's a lesson for the future, but unfortunately, the reality of what happened this year remains depressing.

STovah

Sun, Mar 02 2014, 10:01 pm

amother wrote:

How do employers decide how much should be taken off for taxes? I thought it was a set amount based on one's salary.

Employees fill out W-4 forms with filing status (single, married, etc) and # of exemptions they are claiming for withholding purposes (not related to exemptions claimed on the tax return). Based on those forms, employers withhold using tax tables that are updated annually.

STovah

Sun, Mar 02 2014, 10:04 pm

OP, did you ask your accountant about contributing to traditional IRAs and/or HSAs to cut your tax burden for 2013? You'd still have to use cash to fund these accounts, but somehow it feels better than paying the IRS...

amother

Sun, Mar 02 2014, 10:15 pm

amother wrote:

No, you're right. We weren't paying with each paycheck. It's the total end of year amount.

you should pay quarterly estimated taxes so you don't get hit with interest and penalties

smiledr

Mon, Mar 03 2014, 6:41 am

My husband pays quarterly taxes. He literally takes half of each paycheck and puts it in savings and whatever is left after we file taxes is ours but we would never touch it until then.

amother

Mon, Mar 03 2014, 6:50 am

I hate hate hate quarterly taxes!! I pay upwards of $10k every three months and the sting never goes away!