We got a 3% cost of living raise at work; however, after increasing the tax deductions to where they should be after last year’s Making Work Pay Tax Credit, some people are actually taking home less money than they did last year.
I’m willing to bet most companies did not give a raise, so many people will be looking at a smaller take home amount.
I am one of the few who saw actually saw a raise in pay, but that was because I chose to reject the tax credit, and in fact had more money taken from my check. Why would I do that? Well, Mr. A is self-employed and the more money I have taken from my check, the less money we have to come up with every quarter for estimated taxes.
I am trying to get caught up on Mr. A’s accounting so that I can get an idea of what he netted last year, and then I can do a preliminary quick look at whether we will owe money to the IRS this year.
I did get a chance to look at AJ’s taxes because he will be filing the short form 1040EZ. I anticipated two things when helping him calculate his withholding last year 1) he works for his father, Mr. A at least once a month 2) we should be able to claim him as a dependent. I am going to double check with our accountant and make sure I am correct. If I am, his withholding was pretty close to what it should have been. He will get a couple hundred dollars refund, which was a relief to him as he didn’t want to have to pay.
Did your check get smaller this month?