Why am I paying so much federal this year? Should I get an expert review?

[Kimber74]

should I ask a tax expert why I am paying so much federal?

[xmasbaby0]

No one can see your screen or your tax return, so we do not know how much you owe or why.   Without any personal information you are welcome to provide some details so we would have something to go on in order to help you understand.

We cannot see your screen, your return or your account.  Have you entered ALL of your 2022 information?  All your income, etc.?  Many tax documents that you need do not arrive until late January or even February, so maybe you do not have it all there yet.

Lots of tax laws changed.  Those changes are resulting in lower refunds for lots of people.

There is no recovery rebate credit (stimulus $) for 2022.  The childcare credit is  less and is not refundable. The child tax credit is different and it is less.    And for some people, earned income credit is different because there is no “lookback” to an earlier year.  Those are some of the reasons your refund may be less.

There are a lot of variables that affect your refund or tax due including how much you earned, how much tax you had withheld, your filing status, the number of dependents you claim, your deductions and credits, etc.  You may have lost Earned Income Credit or the Child Tax Credit— did a child turn 17?  If you received the EIC last year, remember that changes in the amount you earn have a big effect on the amount of EIC you can get. (Sometimes earning more money means less EIC)  Are you 65 or older ?  If so, your standard deduction is higher. Everyone has a higher standard deduction now so it is harder to use itemized deductions.

And…..the child tax credit is very different for 2022    For 2021 you could get $3600 for a child under 6 or $3000 for a child between 6 and 17 even if you had no income/did not work.   That is NOT the way it will work for your 2022 tax return.  The “old” rules are back.   The maximum amount of the child tax credit is now $2000; the refundable “additional child tax credit” amount is $1500.   In order to get that credit, you have to have income from working.  The credit is calculated based on the amount you earned above $2500 multiplied by 15%, up to the full $1500.  If your child is older than 16 at the end of 2022, you do not get the CTC.  But you may still get the non-refundable $500 credit for other dependents instead.

And of course, always check your own data entries, looking for errors such as misplaced decimals or extra zeros.

https://ttlc.intuit.com/turbotax-support/en-us/help-article/tax-refund/refund-go-compared-last-year/...

Print out 2021  and 2022  and compare them side by side to see what is different. 

https://turbotax.intuit.com/tax-tips/tax-payments/video-why-would-i-owe-federal-taxes/L3VXudPiN

[Kimber74]

Income is pretty much the same as last year except I started collecting social security in July?  Am I being punished for collecting social security?

[xmasbaby0]

@Kimber74 Not sure being "punished" for collecting Social Security is the correct terminology.  However, if you have other income in addition to the Social Security, your SS can be taxable.  Did you enter the SSA1099 in the right place?

Go to Federal> Wages & Income>>Retirement Plans and Social Security  (SSA1099 and 1099RRB) to enter your SSA1099.

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2022 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 13 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.  These states offer varying degrees of income exemptions, but four mirror the federal tax schedule: MN, ND,VT, and WV

[Kimber74]

It does not show on the SSA-1099 that I paid medicare premiums.  Is that listed someplace else?  You are so helpful thank you.

[xmasbaby0]

If Medicare premiums were paid from your SS benefits they are shown in box 3 of the SSA1099.  When you enter that information into the software, the Medicare premiums you paid flow automatically over to medical expenses, so you do not have to enter that again as a medical expense--it goes in when you enter the SSA1099.

[Kimber74]

How do I know if it would be better to file married separately?  We are currently filing married filing jointly.

[ErnieS0]

Married filing jointly and married filing separately will generally make little difference in your total tax bill if you are using the standard deduction. Splitting your filing may give you a few dollars more or less. Or one of you may get a refund and the other will owe, but the combination will be the same as if you filed together.

In some cases, married filing separately will help, generally, if there is a big difference in income between the two spouses. For example, if you had large medical bills that were less than 7.5% of your total income, filing separately may allow you to claim medical expenses that you would not be able to with a joint filing.

If you file separately, you both must use either the standard or itemized deductions. Additionally, you may lose some credits. 

You can create two new separate accounts in TurboTax Online for free to see if it works out better. Don’t change your current account.

If you do better filing separately, file those two returns instead. Otherwise, you can clear your data.

How do I clear and start over in TurboTax Online?