OK, tax Gurus...

I was playing with Tax Cut but I am kind of disappointed with the estimated amount of the refund I'd get

I am active duty, earned 22K, ~$700 withheld by IRS

My spouse is housewife, however she was temporarily employed by the installation. She earned $2700, got 50 dollars withheld by IRS.

No property, no kids, no dependents, no IRA/TSP, no interest earned, no student loans...I mean nothning...

Here are the refund estimates that TaxCut brings up.
Married/Joint return, reporting just my income = 271 in refund
Married/ Joint return, reporting both sources of income = $41 in refund

Are such small refunds possible at all?

Filing separate return gives me about $1000 that I'd owe to IRS.

Previous year's refund was $1700 and my wife did not work at all.

Looks like that my wife's temp job screws up refund :-)

Do we need to report my spouse's income?
What's the best plan of action?

Thank you

Yes, you must report your wife's income!! She is not to blame for the small refund because taxes are taken out based on what you tell your employer on your W-4. Ideally, you might end up with no refund, depending on your choices in claiming allowances on the W-4. Instead of the government holding on to your money, and not paying interest on it, you'd be better off (if you invest wisely) even if you do owe a bit when you file.

In response to your question about "small refunds", it is not uncommon for people to end up owing the government. It's not what you get back which is important. It is what you have withheld from your pay. Your "best plan of action" (in lowering your tax), might include contributing as much as possible to retirement plans (IRA's or plans offered by your employer). The purchase of a home might generate a higher refund if you purchase a home (mortgage interest and real estate taxes are deductible if you itemize on Schedule A of your Form 1040 tax return). That's it, FOR STARTERS!!!-

Greetings and special blessings.

Playing, sorry you have a private profile.

You can to the www.irs.gov and click on to free file, work through until you can click on Turbo Tax.

I just ran your numbers, with the amounts that you gave, which I am sure you rounded off, your refund is on $27.00. Your best route is to file Joint. If you file married filing separately you will have a total tax bill of $1,593.00, so you would own another 893.00.

If you got that much back in a refund last year, you must paid a lot in throughout the year.

TaxService gave you some good information. Some people have trouble saving money, so they allow the government to save it for them interest free so they can get a nice refund.

I trust this helps, I know it is not what you want to hear.

Thank you for your service to our great country.

May God richly bless and keep you and your family.

In His Service,

Grover

Without children, you can not get back more in an income tax refund than your pay. You paid $700. Your wife only paid $50. At your income level she would owe more than she contributed and you owed less. The outcome is about break even.

I get the same refund as Grover - $27.

Here is a free 1040EZ estimator - it says $30.

http://www.finance.cch.com/sohoApplets/TaxEZ1040.asp

Thank you so much, Tax Mavens.

I really appreciate your opinions.

I guess I'll start to save for retirement, so I can get a tax advantage next year.

quote:

Originally posted by DA4187:
Thank you so much, Tax Mavens.

I really appreciate your opinions.

I guess I'll start to save for retirement, so I can get a tax advantage next year.

********

You may start right now, if you have some money set aside. It's possible that you may put up to $5,000 each (you & your spouse) in an IRA for 2007. If you had non-taxable combat pay, you may be able to go as far back as 2004, filing amended returns, to get refunds for those prior years. If you do invest the money, make sure to tell the administrator that it is for 2007. You can make a contribution to your IRA by having your income tax refund (or a portion of your refund), if any, paid directly to your traditional IRA, Roth IRA, or SEP IRA. For details see the instructions for your income tax return or Form 8888, Direct Deposit of Refund to More Than One Account.

Contributions can be made to your traditional IRA for each year that you receive compensation and have not reached age 70½. For any year in which you do not work, contributions cannot be made to your IRA unless you receive alimony, nontaxable combat pay or file a joint return with a spouse who has compensation. See Who Can Set Up a Traditional IRA, earlier. Even if contributions cannot be made for the current year, the amounts contributed for years in which you did qualify can remain in your IRA. Contributions can resume for any years that you qualify.

Contributions must be made by due date. Contributions can be made to your traditional IRA for a year at any time during the year or by the due date for filing your return for that year, not including extensions. For most people, this means that contributions for 2007 must be made by April 15, 2008, and contributions for 2008 must be made by April 15, 2009.

Nontaxable combat pay. If you received nontaxable combat pay in 2004 or 2005, and the treatment of the combat pay as compensation means that you can contribute more for those years than you already have, you can make additional contributions to an IRA for 2004 or 2005 by May 28, 2009. The contributions will be treated as having been made on the last day of the year you designate. If you have already filed your return for a year for which you make a contribution, you must file Form 1040X, Amended U.S. Individual Income Tax Return, by the latest of:
3 years from the date you filed your original return for the year for which you made the contribution,

2 years from the date you paid the tax due for the year for which you made the contribution, or

1 year from the date on which you made the contribution

Hope this helps 'n' GOOD LUCK!!=

quote:

Originally posted by DA4187:
OK, tax Gurus...

I was playing with Tax Cut but I am kind of disappointed with the estimated amount of the refund I'd get

I am active duty, earned 22K, ~$700 withheld by IRS

My spouse is housewife, however she was temporarily employed by the installation. She earned $2700, got 50 dollars withheld by IRS.

No property, no kids, no dependents, no IRA/TSP, no interest earned, no student loans...I mean nothning...

Here are the refund estimates that TaxCut brings up.
Married/Joint return, reporting just my income = 271 in refund
Married/ Joint return, reporting both sources of income = $41 in refund

Are such small refunds possible at all?

Filing separate return gives me about $1000 that I'd owe to IRS.

Previous year's refund was $1700 and my wife did not work at all.

Looks like that my wife's temp job screws up refund :-)

Do we need to report my spouse's income?
What's the best plan of action?

Thank you

At least you get some sort of a refund.

quote:

You may start right now, if you have some money set aside. It's possible that you may put up to $5,000 each (you & your spouse) in an IRA for 2007.

It's only $5,000 if you are 50 years old or older. Otherwise, it is $4,000.