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ok go for it
ok this part is going to use the previous part what was the taxable income from the last part?
good, where does that number fall? which tax bracket are you in?
the last one?
see in the first column how it says "if your taxable income is...."
where does 9,325 fit in?
so we have to "$16,781.25 plus 28% of the excess over $82,400"
no, look in the first column tell me which tax bracket 9,325 fits is it the first tax bracket? second? third? or fourth?
oh shoot! no no its the second one ahah
so what is the rule for this bracket?
$837.50 plus 15% of the excess of $8,375
so first you need to find the difference between 9,325 and 8,375 9325 - 8375 = ???
now take 15% of that to get 15% of 950 = 0.15*950 = ???
now add that to 837.50
that's your tax liability
that is the official amount you owe to the government now go back to the witholdings chart how much did you pay to the government?
so did you overpay? or underpay? or did you pay the perfect amount?
im not sure how do i know?
well you paid 1664.52 because the gov withheld this amount but you really only owe 980
oh so overpay
that means you'll get a refund the amount of the refund is the difference between what you paid and what you owe
Tax Refund = (Amount you paid) - (Amount you owe) Tax Refund = (1664.52 ) - (980) Tax Refund = 684.52
If the tax refund is negative, then you still owe the government tax money and you would send this money (probably in the form of a check) along with your filled out tax forms In this case, the refund is positive, which means they will send you a check after the tax form is processed
so is this all for number 1?
hmm let me check
no not quite
#1 is asking about allowances
and the federal withholding
how can we figure this out??
you already did, when you circled the 2 and highlighted the 1664.52
there are 2 allowances (you and the child), which corresponds to a federal withholding of 1664.52
Oh! okay! ahah so what about number 2?
#2 is already answered (look above at how we determined if we get a refund or if we still owe tax money)
so what we discussed would be numbers 2 AND 3 actually?
you got it
oh gosh now number 4?
ok what do you want to change the allowances to?
im not sure? why would i change it?
let's say you have another kid or the kid you have lives elsewhere (eg: the kid gets old enough to live on his own)
those scenarios would change your allowances
so what should i put for number 4? im still not understanding?
I think this is where you can get creative and say "I want another kid, so my allowances go from 2 to 3"
then you recalculate your taxes and refund make sense?
so how do i calculate all of that?
so say i have 3 allowences for the first part of number 4
for the second bullet my answer would be $1,109.42?
you would then calculate your new federal withholding
use the table from the last part
what do you mean? what table?
remember the table where you circled the 2 and highlighted the 1664.52? it's that table
right so if i had 3 allowances now then the second bullet my answer would be $1,109.42?
what do you mean by "second bullet"?
you said "then the second bullet my answer" what did you mean by "second bullet"?
oh ahah this
oh i see
first bullet: the new federal withholding is $1,109.42 (you find this from the table) second bullet: this is where you calculate the new refund third bullet: an explanation as to why the refund changes
that's the basic format of your answer
i see but what im saying is how do i calculate all of this?
remember how we calculated the refund for the allowance of 2 people?
hold on let me see
ugh im getting so mad :( i dont know...
it's ok, don't panic just take things one step at a time
what was the tax liability?
for 3 allowences?
no don't worry about the allowances for now
what was the tax liability?
the new withholding is $1,109.42 so what's the new refund?
hint: Tax Refund = (Amount you paid) - (Amount you owe)
$1,109.42 - (unknown) ?
amount you owe is the tax liability
idk how to find out how much i owe
you just told me the tax liability a few posts ago
yes good, so it is $1,109.42 - 980 = ???
so this is the new refund
what was the old refund?
good, so clearly the first scenario where you have 2 allowances means you get a higher refund...BUT...you pay more in withholdings so you have a tradeoff going on
"the new amount of your refund from the government or balance owed to the government" how do i figure this out?
the new refund is $129.42
and you figured it out by saying Tax Refund = (Amount you paid) - (Amount you owe) and then subtracting 1109.42 - 980
oh i gotcha. so now what should i say for this?an explanation on why changing your personal allowances will increase or decrease the amount of taxes you must pay or the amount of a refund you will receive. The last refund was 684.52 and my new refund is 129.42.
yeah you have to explain why the refund went down
it is because i now have 3 allowences?
yes you increased your allowances, which lowered your withholdings and that consequently lowered your refund so you have a pro and a con pro: your withholdings are lower, so you pay less to the government con: your refund is lower, so you receive less money back it's up to you to decide which is better for you
thank you so much you are the biggest help ever!
you're welcome, glad to be of help