Nothing else has changed besides increased daycare costs! I only got a SoL raise. I can't think of anything else that's different. We're looking into it with our accountant but it's so disappointing esp as we were thinking we'd get more than last year since DD2 has since gone to daycare, doubling our costs there.
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My federal was less which they said was because we didn’t have any education costs this year but our state went up so who knows
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@snowjewelz: Do you have investment income? Since the stock market performed so well last year, mutual fund companies passed on lots of investment income to investors. I haven’t even done my taxes yet because I know I’m just going to owe a ton of money because of that.
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@snowjewelz: there are a lot of factors that go into your refund. What was the difference in total tax? Did you withhold less? Getting a small refund is actually better because it is essentially an interest free loan to the government.
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@Truth Bombs: I'll compare both... But I don't have a huge amount of investment and my dividends don't add up to be much.
@skipra: We haven not changed with-holdings. I am changing it this year to keep more $ and expect a smaller refund; but b/c I hadn't changed it prior to this tax return, I thought I'd be getting back at least the same amount. I'm 3k less.
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@Truth Bombs: We're filing on 4/16 for the same reason.
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@Truth Bombs: Just finished my taxes and can confirm my CGs were out of control.
Daycare expense deductions are capped:
It doesn't surprise me it didn't have that big of an impact. I was just doing my taxes and even if I more than double my childcare expenses it only has about a $500 impact. I can only claim 20% of my childcare expenses (it's between 20-35%).
ETA: I would just compare 2017 and 2018 to see where you differ. I just saw the $3k difference - that's pretty considerable. I would guess that your withholdings got messed up at some point. Did you both happen to claim your 2nd daughter? That would most likely explain the problem.
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Yeah.... we ended up owing a bunch of money. We obviously need to fix our withholding, but I don't understand why it was so different from last year either. We both got cost of living type raises, but that was the only change.... No advice/answers, but just wanted to commiserate. It sucks not getting as much as you expected!
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@snowjewelz: I just looked at ours out of curiosity and although our refund was only off by about $50, we actually paid $1,500 more in taxes this year. So that is what I mean about the refund not really telling you much. DH got a raise so our increased tax makes sense to me. What is the difference in your taxable income (line 43)? And what is the difference in your withholdings (line 64)?
ETA: were you out on maternity leave last year? Your income probably was higher this year if so, which really could have changed things. Like part of your income could be taxed in a higher bracket.
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@snowjewelz: So if you had a baby last year, there are probably a couple differences. The beginning part of the year your withholdings may have been taken assuming only 1 dependent and more money was taken out but you were taxed as if you had both children the entire year. If you took mat leave, your income was probably significantly lower unless you were paid 100% the entire time. Just a couple thoughts.
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@skipra: Oh good thoughts with both! I bet the first part was 100% the reason as she had a December baby!
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@skipra: Ohh those are good points. I did have non paid maternity leave for 12 weeks in 2017. DD2 was born 12/20/16. This is sooo confusing. I'm def still having my accountant go through the whole thing to clarify it for me... Because this still didn't happen with DD1, also a Dec baby.
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We always owe. I thought we'd owe less this year, but...
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@winniebee: Right?! What about G?!
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@snowjewelz: ah makes more sense now!
So, in 2016 your w/h was probably for 1 child but you were taxed as if you had 2 = less tax owed than paid
In 2017 you earned less and had w/h for 2 children = far less taxes withheld for similar or less tax owed. And that would by why your refund was significantly lower in comparison.Look at line 64 for both years, I bet it will be a big difference.
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@skipra: Dun dun dun... I'm not at home so I'm trying to get DH to see if he can dig up last year's return! I'll keep you posted
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We owed $6k this year after only owing $500 last year. We both got substantial raises, though, so I guess it was to be expected. I adjusted our withholding as soon as we filed so hopefully it won't sneak up on us next year.
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@snowjewelz: could it be your raise bumped you into the next tax bracket?
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@Mrsbells: Haha definitely not unfortunately! It was a tiny SOL raise.
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@snowjewelz: i also agree with previous poster about the withholding. I generally put down 0 so that way i get taxed more upfront and get more back later
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@Mrsbells: Mine was only 1!
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We got back more than double last year but had significant changes (birth, house, etc). Here borrow our money, government!
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I do 0 withholdings and request to be taxed at the single rate. It's probably unnecessary, but I got a decent chunk back because of it.
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Do you have an HSA? I discovered that the more I contribute to my HSA, the less is withheld per paycheck, and it seems like the wrong amount. Like, my withholdings are normal, but my fed tax would be like less than $90 per paycheck whenever I upped my contributions (I changed them a lot last year due to health emegencies.)
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@Adira: Do you file as married/joint still? My W4 actually still had me as single with 1 allowance for some reason
@DesertDreams88: Nope, no HSA!
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@Adira: I do this too and don't get a decent refund. It's what is recommended if you are a dual income household.
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@snowjewelz: Yep! There was an option on my W-2 where I select married/joint and then a box that said something like "Check if filing married but withholding at the single rate" or something like that.
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@LBee: I dunno then... must have something to do with how much you make and other factors!
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@LBee: Uggh I'm hoping my accountant can really walk me through how to change my W4 for the max benefits. They're prob slammed since it's getting close to the deadline.
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@snowjewelz: Did you end up owing or just didn't get as much a return as you hoped?
ETA: If you didn't owe I would hope your accountant would just advise you that your withholdings are correct. The ultimate goal from an accountant perspective is to attempt to break even.
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@LBee: I got a LOT less. But I do think what SKIPRA said was true, maybe the timing of me having babies/going on maternity leave, etc just messed things up.
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@DesertDreams88: Your HSA contributions are taken before taxes so that is why your federal tax withholding is reduced. If you earn $1,000 and contribute $500 then you are only being taxed on $500. Depending on how much it reduces your income, it may appear that you are in a very low tax bracket/will not owe much in taxes.
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@snowjewelz: You went on an unpaid maternity leave in 2017, correct? That would lower your tax liability. The issue she mentioned - having been escrowing taxes in 2016 for 1 dependent and from a tax perspective having 2 - is an issue that isn't going to change next year.
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@snowjewelz: Same as what @LBee: said, a cpa will tell you that you should aim to not get a large refund. My guess is that your 2016 withholding was the year that was off and last year was more typical. I am no longer a practicing CPA so I have no idea how it will translate to 2018 tax with all the changes.
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@skipra: Agreed. 2016 is the anomaly, not this year. Your accountant's recommendation if you want to get a certain refund will most likely be to ask your payroll to tack on an additional $x amount of taxes to be withheld from your paycheck. That doesn't really make sense. You are giving the IRS a loan when you could instead just save that money yourself from your pay check.
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@LBee: agree about the refund too. You can set up a savings account and have x amount direct deposited each pay check and then transfer it into your checking account on April 15. Same effect but you'll have earned some interest on it over the year.
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@LBee: @skipra: So since I'm at work and have limited info...
First LO born Dec 2014. 12 weeks unpaid Mat Leave in 2015.
In 2016 we got close to 7k.2017 is when we suddenly got 9k.
Second LO born Dec 2016. 12 weeks unpaid Mat Leave in 2017. In 2018 we got 6k.
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@snowjewelz: 2015 is the year you need to compare your 2018 number to, not 2016. I'm willing to bet it was a randomly higher number as well. The year following your withholding should fall back into where it ought to be as your paycheck adjusts to the amount of children you have and automatically increases your net and decreases your withholding.
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@LBee: right, this is what you need to compare to. Your 12 weeks unpaid leave will impact your taxes significantly. I’d suggest working with a CFP (not just your accountant) to help you better plan your withholdings. This tax year was my first year in the past 4 where I was working full time and didn’t have a maternity leave and like @skinnycow we really got slammed with our taxes (like I can’t even fathom how it’s possible, but we do extensive planning).
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@snowjewelz: That is a pretty sizable refund, either way! Definitely check with your accountant but I think if you adjust your W4 to withhold 110% of your 2017 taxes owed you won't be charged any penalties. You can put all the extra money into a savings account you don't touch. Next year you would owe money rather than getting a refund, but you'd have the money in the savings account to pay the IRS and yourself. You'd end up getting slightly more because you'd be earning a little bit of interest. Ally is paying 1.45% right now. Not much but would probably give you at least an extra $50.
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