Taxes?

Last year my husband and I got a very good amount of money back. We don't have a house or anything, so we dont have write-offs. This year I was told that we owe almost $2000. We def. made more money this year, but not in excess of what we made last year. Does anyone know what the reason could be for us owing money?

Re: Taxes?

You probably fall into a higher tax bracket since you stated that you made more money. Also, if you made more money, you might have not paid as much tax (allowances) as you could've.

Re: Taxes?

The only reason to owe money for taxes is that you didn't pay enough throughout the year. More income may have pushed up your tax bracket or you may now be subject to AMT where you were not before. You may not have made deductible IRA contributions where you did last year. There are lots of reasons why and you would have to compare 2006 tax return to 2005 tax return to get the answer.

Re: Taxes?

Did you or your husband withhold any additional money from your paychecks last year? If not, you could be a "victim" of the marriage penalty. Federal income tax treats your income as if you are the only person in your household making money. However, when you combine your and your husband's income, you're likely in a higher tax bracket, and more money should have been taken out. If you don't want to owe money, you can have your employer withhold more from each paycheck.

Re: Taxes?

Same thing happened to us. We made much more money this year so we fell into a higher tax bracket and didn't pay enough taxes. We usually get a couple of thousand back but instead this year we owe it.