Tax refund estimate

[Bob B.]

I've estimated my federal and state income tax refund.

Federal withheld = $2,854
State of Michigan withheld = $1,746
Estimated federal tax = $2,687
Estimated state tax = $1,548
Estimated SS tax on wife's freelance income = $484
Child tax credit + retirement savings contribution credit = $4,796
Estimated federal refund = $2,370
Estimated state refund = $199
Total estimated refund = $2,569

What will I do with the money? Pay bills.

[littleroc02us]

Why do you get refunds?

[Bob B.]

Why do you get refunds?

Difference between fed withheld and tax due BEFORE credits = $167

The refund is due to child and retirement savings tax credits not over withholding.

Please correct me if I'm wrong.

Federal withheld = $2,854
Estimated federal tax = $2,687
Child tax credit + retirement savings contribution credit = $4,796

[Hector]

What bills do you need to pay?
debt, emergency, ret.....?
more information is needed

[disneysteve]

The refund is due to child and retirement savings tax credits not over withholding.

You could still adjust your withholding so that you don't get such a large refund.

[Bob B.]

You could still adjust your withholding so that you don't get such a large refund.

Thank you

[JoshuaHeckathorn]

You could still adjust your withholding so that you don't get such a large refund.

Yea- I agree with DS. Get the cash in your bank account now so you don't have to wait around for Uncle Sam to cut you a check back. And if you haven't fully funded your EF or maxed out retirement contributions, then do that first.

[littleroc02us]

Thanks guys, that's where I was planning on going with my post, but ya beat me to it.

[Bob B.]

So...how many allowances should (can) I claim?

There's me, DW, two children, and a foster child we hope to adopt. By the end of the year, we'll have had the foster child for 9 full months, so we will claim him as an exemption.

DW doesn't work.

I currently claim 4 allowances. I hadn't thought to log on to the HR website to change my allowances after we began caring for the foster child.

Seems like I looked into this in the past, and increasing allowances made only a minor difference in the amount withheld, like to the tune of $50-$100 at the end of the year. Not a big gain if there's any risk in claiming too many allowances.

[Slug]

You need to use IRS calculator, because there are penalties associated with claiming too much. It's a very strange calculation in my opinion. I can't wait for the promised overhaul of the tax code.

[jpg7n16]

Here's the link to IRS withholdings calculator - straight to the IRS.gov site:

2010 Withholding Calculator