Did you work two jobs last year? There is a chance you are due back additional taxes! When combined Social Security (FICA) taxes withheld exceed $6,621.60, any excess paid will be refunded on your federal tax return. See this article about it:http://online.wsj.com/article/SB10001424052748703843004576140972174233398.htmlIf you have excess social security withheld you probably have excess State Disability withheld, too. SDI withheld in excess of $1026.48 is refundable on your state income tax return. See this from the Franchise Tax Board:http://www.ftb.ca.gov/individuals/faq/ivr/227.shtmlRemember to bring this up with your tax preparer so you can get the maximum back. (If your tax preparer is me I will know this when I see your W2s).
Brian’s Tax Musings
Did you know there is a federal tax credit for making a retirement contributiom? The amount depends on several factors. Maximum adjusted gross income is $27,750 for single, head of household is $41,625 and married joint is $55,500. This link gives more details:http://www.irs.gov/newsroom/article/0,,id=107686,00.htmlWhile I usually like a Roth IRA more than a traditional IRA because I think taxes will go up in the future, If you make a traditional IRA ot 401K contribution, you not only get the tax deduction (plus the company match in the 401K) but a tax credit too. It really does pay to save for retirement.
Brian’s Tax Musings
Want to be a millionaire? The best way is to start young and put a monthly amount into a Roth IRA. 400 a month at 8.5% annual yield for 35 years will give you a million bucks! The key is to start young and consistantly invest. WIth the Roth IRA, you will never have to pay income tax on the money either. I will go into this a little further in my March newsletter.