No Refunds Since Child?

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  #1  
Old 02-16-18, 10:20 AM
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Angry No Refunds Since Child?

I'm disappointed. I've always heard that having a kid gets you tax breaks, all this stuff. For years as a single guy I got a couple grand back in taxes. Then I got married, and that one year, the tax return wasn't as big previously when I was single, but still I got a tax refund. Then we have a kid and we ended up owing money! I thought, well that's odd, maybe it's cause she was born that year, next year will be the year!

So here I am doing my taxes, married, filing jointly. Nothing complicated, just two salary incomes, some bank interest, standard 401k contributions through employers, HSA accounts, church donations, mortgage deduction. And now the kid's been with us the full tax year. I now owe a couple grand!

At first I thought it was maybe our W-4 dependent claims, but mine is 0, has been for years, and hers is 1, never changed to account for our child. I just don't understand how I owe so much. If I update the W4 I feel like I'll end up owing even more next year.

Another strange thing, if I just, completely remove my wife's W2 from turbotax, it shows a couple grand refund. If I add her W2 back in, we now owe a couple grand. I don't understand why, her income on the W2 is less than mine, but added/removing does change which side of $100,000 for total income, is there some giant tax rate change there?

Am I missing something in TurboTax or is this just... how it's going to be? Worth paying $80 or whatever to go to someone to figure out what's wrong or is my theory of kids=giant tax return just simply wrong?
 
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  #2  
Old 02-16-18, 10:31 AM
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Generally refunds are based from you paying too much tax during the year. It might be time to have someone else review your taxes to make sure you are getting all the deductions you are entitled to. It doesn't matter if your kid is only alive for part of the year - it still counts, same as getting married at the end of the year.
 
  #3  
Old 02-16-18, 11:51 AM
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Your figures make no sense unless your wife was underpaying taxes. If she's claiming herself and the child on her W-4 (2 allowances) you should still be getting money back. In fact, you should still be getting some back even if she claimed 3 total, since you are claiming 0 and thus max withholding.

It's not that hard to see where the problem might be if you just take what she paid in taxes as a percentage of her income and compare it to yours. If your tax withholding rate before all the adjustments is 18% and hers is only 2%...well, there's your problem. Based purely on what you've said...if your net income is much greater with her income included and your withholding isn't correct...yeah, you could jump to the 25% bracket, but with personal exemptions and the deductions you mentioned...you should be back around 12-15% or lower it would seem to me. It's all about having the proper info on your w-4.

Also...$80 isn't going to get you much in the way of help. At that price, the person doing your return is basically just typing in the same numbers as you in a different software package. They may even be a seasonal employee.
 
  #4  
Old 02-16-18, 12:01 PM
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You need to run the numbers for married, filing jointly AND married, filing singly to see the difference. Remember, if filing separately only one can take the deduction for a child.
 
  #5  
Old 02-16-18, 05:14 PM
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Thanks for the info. So if I just take my W2 and divide the sum of boxes 2,4,6 by box 1 (taxes withheld/wages) I get about 19%. If I do hers alone it is 15%... so that seems about right given her income and mine.

Does box DD count against you, cost of employee's health insurance plan?

Both percents, coupled with our W-4s currently at 0 and 1, not 3, and standard deductions/donations etc, it doesn't make sense.
 
  #6  
Old 02-16-18, 05:19 PM
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Oh boy, having kids and saving money, aint ever going to happen!!

Enjoy the relatively cheap years, just wait till they get to be teens, that's when the the money flow really starts!
 
  #7  
Old 02-20-18, 04:55 PM
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Thanks for the info. So if I just take my W2 and divide the sum of boxes 2,4,6 by box 1 (taxes withheld/wages) I get about 19%. If I do hers alone it is 15%... so that seems about right given her income and mine.

Does box DD count against you, cost of employee's health insurance plan?

Both percents, coupled with our W-4s currently at 0 and 1, not 3, and standard deductions/donations etc, it doesn't make sense.
 
  #8  
Old 02-20-18, 07:57 PM
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Code DD doesn't affect anything. It's there basically for informational purposes.

You should not be factoring in boxes 4 and 6 into your calculations. Those are Social Security and Medicare taxes, which are paid into a different "pool" so to speak. You won't get a "refund" of them, you will only see their benefit when you eventually draw on Social Security and Medicare.

Your refund or amount owed is based on box 2 -- income tax withheld.
 
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