Who do I blame for a sh!tty tax return?

[2mAn]

Things that changed in 2016 from years past:
-Got a raise
-Got married
-Trump is president

Talked to a few people and it seemed like the best thing for us to do was to recommend file as "married filing separately" Reason is that my wife has a pretty substantial student loan debt and she pays on an income based repayment. For this reason, they said that if we file together her payment would basically double. Fine, I filed on my own.

My tax return went from close to a grand (on average) to about $250.

I dont think my ~10% increase in pay is to blame for this, but more the fact that I cannot take advantage of tax breaks that I used to.

Anyone else been down this road or have knowledge of this situation know how to avoid this BS in the future. This doesnt even cover the camber plates Im about to buy :rofl: Dont tell me that my car shopping spree will forever be ruined

[ST1G]

Did you change your number of exemptions in your w2? If you used less deductions and credits this would easily account for $750 change. Did you move up a bracket?

Really it seems that we don't have enough information to say exactly why it's changed.

[dontrusthise30]

I guess the biggest thing would be did you change how many you claim on your taxes when you got married? If you changed your w-2 to claiming 1 instead of 0, then that's what happened.

[2mAn]

I changed nothing on my withholdings and I highly doubt Ive moved up any brackets. I lost the Earned Income Tax Credit, deduction on College Tuition paid, and Traditional IRA deductions by being married and filing a separate tax return. She will lose the deduction on Student Loan interest paid and the Earned Income Tax Credit. She doesnt really contribute to her IRA (something I will pay for later in life) because shes really tight on money as is right now

[djjerme]

I've played with both over several years and was never able to make the "filing separately" pencil out. In the end, it just was better to file jointly..

If you want to really reduce your taxable income, you have to have a game plan. Charitable donations are o.k., but won't reduce your income, and only move the needle a quarter of the dollar value donated.. the better option is pre tax retirement savings. If you can afford an end of year catch up and max out both of your pre tax retirement, you'll be able to really bring your AGI down.

Now, if you have a home business, this can also help get you a dollar for dollar reduction of your taxable income. The same with kids (when you have them.)

There's a lot more little things you can do up to a point, but it also depends on how much in the gray area of the rules you feel safe playing..

[2mAn]

No kids yet, probably not for a few more years. I know they will help big time, but Im not going to have one just for the deduction. I currently contribute 8% of my own check to my IRA, but she doesnt. I know this will help, but I need to get her on board and its going to be hard in the current situation shes in. She bought a new car before we got married (against my advice), so between that, the student loan and everything she doesnt have extra income to contribute to the IRA... I hope by the next time we have this thing working in the right direction. Not going to lie, Im pretty annoyed with this

[deutschman]

Just start popping out kids like Mike Pence wants you to. Then you can collect tones of tax returns on them ;)

[djjerme]

The thing to remember is that Tax laws change from year to year. It's not a flat tax and the tax brackets as well move up and down each year. So what worked last year, may not be the same next year. That's why it's good to have options for how to control your AGI by itemizing your deductions.

Another thing (and probably why Trump won't release his tax return) is depreciating assets. If you own property or business, the value can be depreciated until you sell it. That is how you can help to offset your net value at the end of the year. But that's a deep topic I don't feel like getting in to on here.

If it was me. I'd put the pressure on her to trade or sell off the car and buy something outright. It's not benefiting you in any way, and honestly, if she is not putting money in to retirement at this age, then she's doing it wrong. Especially if there is ANY kind of employer matching. That's free money she is not taking.

But I don't want this to turn in to a wife-bashing thread, just work with her to figure it all out. Also, really look at your expenses. Use a freeware like Mint to monitor where your money is going. You can use it to track donations and tax exemptions as well.

[deutschman]

I get a decent amount back on interest collected on my student loans. But I got a lot less back this year as well.

[djjerme]

One thing to remember, Taxes are a loan. If you are getting a huge refund at the end of the year, then you just gave the Fed's an interest free loan for the year, and basically got your own money back that you have nothing to show for. Most smart money managers will tell you, it's better to end up with a zero sum or even paying maybe a small amount to the government, then at least you had most of the year to let YOUR money work for you..

[2mAn]

I work in finance so I understand all about the employer match (and why I actually have 10% of my annual actually going into the 401k). Im already game planning the next vehicle so I think this is the best place to start with her.

I know this isnt about wife bashing because its not that, its about finding the best way to get more money back, or at least giving the gov't less each year.

with the MFS we are both losing out on tax breaks, so I think this needs to be the plan for me this year. We need to file jointly and I just need to get her into a place where she can put more into her retirement acct and give away less money in interest.

Its all a learning process and Im having to adjust her habits since this has been my life. I just wasnt 100% sure if it was because I made more or because I cant use the tax breaks.

[djjerme]

with the MFS we are both losing out on tax breaks, so I think this needs to be the plan for me this year. We need to file jointly and I just need to get her into a place where she can put more into her retirement acct and give away less money in interest.

..that's a very good plan to have, and I think is your best path. It's takes a while. My wife and I have been married 8 years now, and together since 2004. It took us several years to get our taxes dialed in, and even then with job changes and life changes it still evolves. But one of the constants is always maxing out the Pre-tax retirement as much as possible.

[Exodus_2pt0]

Have some kids.

Daddy's little tax return.

[mrsleeve]

Well your not owing, and you overpaid very little, this is by definition doing it right..... You are keeping nearly the maximum amount of your own money to do with as you see fit during the year and not loaning to the govt interest free for 12 months. If I had a "normal job" 9-5 50 weeks a year, I would prefer to owe a few hundred at the end of the year for the reasons I have laid out above.

Getting married effectively doubles your exemptions, if you still paid taxes like you were single then you should be over paid

[EyExR]

Have more taxes taken out per pay period through your employer. And file married at the single rate.