Revamp the Tax Codes

My husband has grown increasingly frustrated trying to make sense out of filing taxes. Unfortunately, they have to be done. This year, he handed me the folder of papers and asked me to take it to a tax preparer.

A couple decades ago, we used to get some substantial refunds back from both the federal and state. It gave us a chance to take a chunk out of our debts, even if we had ‘loaned’ it to the government without getting any interest from it. The kids are pretty much grown and gone, and it happens that we are no longer paying enough in taxes.

Yeah, that’s right. We are looking at paying a bill to both the feds and the state. We not only are trying to clean up some Christmas debt, and stay on top of our regular debt, pay our real estate taxes, license all our cars and pay this year’s insurance premiums, now we have taxes to pay.

“Where’s the problem?” I asked the tax preparer. “For years, our taxes have been withheld at the appropriate rate for ‘married, no dependants’. We assumed that would at least put us in the approximate neighborhood of what we would owe for the year. But just in case, I instructed my part-time job to hold out extra.”

I was told that the W4 we fill out for our employers has little to do with what we will owe in taxes. Each employer withholds as if that job is our only source of income, which puts us in a lower tax bracket. Then when we file our taxes, our sources of income are combined, which puts us in a higher tax bracket. Suggestions for ‘rectifying’ the problem was to change our “married, no dependents” to “single, no dependents”, ask them to hold out extra. One last suggestion was to contact my pension plan manager and ask them to hold out a higher percentage of my pension for taxes.

I seem to vaguely remember one of the President Bushes cutting back how much was deducted from our paychecks. It was heralded as a means of stimulating the economy, a way of giving the middle class a few extra dollars in their pocket. This doesn’t really make sense to me. A couple extra bucks in my paycheck doesn’t go far enough to do any good; it’s not enough to pay a bill, it’s just enough to get a frappachino I really don’t need. I’d much rather ‘loan’ the government a couple extra bucks each paycheck and get a refund rather than a bill.

Why do we have to jump through hoops just to break even?