First year in the Public Sector tax questions

[Anonymous]

Hi all,

I've been using Turbotax for years, but this year's taxes will be done with me working in the public sector for a local government entity. 

I was trying out some tax refund estimators, both on Credit Karma, as well as TurboTax, and they keep saying I'll be owing over $1,000, when I've never owed taxes before. I've always gotten even a modest return of a few hundred dollars at the worst.

I'm wondering if they don't take into account all the different pre-tax options we have, such as an FSA, 457(b) deferred compensation, etc.

It doesn't seem like it should be, but is filing taxes this year going to be significantly different from previous years, moving from private into public sector work?

Any replies would be welcome, especially from fellow public sector employees.

Thanks!

[Anonymous_]

@dmertz 

[dmertz · Accepted solution]

The FSA has nothing to do with your tax return.

Make sure that when telling the estimator the amount of your wages you enter only the taxable amount of wages, not the gross amount of wages before deductions for elective deferrals to the 457(b).  There are some things that these estimators do not take into account, but these are usually things that, if not considered, would cause it to estimate a greater refund or smaller balance due, not the other way around.

There should be no significant difference between working in the private sector and making elective deferrals to the employers 401(k) and working in the public sector and making the same amount of wages and the same amount of elective deferrals to the 457(b).  Perhaps you somehow specified at the new job that less taxes be withheld, increasing your balance due.

You would get a much better estimate by using TurboTax to prepare a simulated tax return.  You would generally want to use the CD/download version of TurboTax, not the online version for this.

[Opus 17]

There are no special difference to working in the public sector.

You may be having too little withheld.  If you just used the new form W-4 for the first time, your withholding might be different (maybe your old job was relying on a W-4 you filed before the 2018 tax reform and never updated.)

If you have more than one job or you are married and your spouse works, you need to complete new W-4s for both jobs at the same time--whenever you update one, you must update them all.  Follow all the instructions on all 4 pages of the W-4, not just the front page.

When you use the estimators, are you taking account of pre-tax deductions for medical expenses and your retirement plan?  It depends on how the estimators are programmed; if it asks for your gross taxable income and then asks for pre-tax deductions, make sure it is asking for all your pre-tax deductions. 

You can also use the IRS tax estimator, it is very accurate, but you need at least one or two pay stubs from your new job so it can calculate the future withholding. 

https://www.irs.gov/individuals/tax-withholding-estimator

[Anonymous]

This may be the problem - I think the estimators were saying to use your gross wages, and I may have just taken them at their word...

My new W-4 was pretty simple, as it usually is - single, no kids or dependents...done.

Thanks for the reply!