Explain something to me...TAX

[Dawn in OH]

I can't seem to understand how this works right.

 

The tax collection agency responsible for our city taxes has changed. The new agency says, "If you anticipate owing $10.00 or more in income tax in 2011, you must estimate your taxes and make quarterly payments as your income is earned."

 

The first problem I have is making payments on money we haven't earned yet. What if my husband loses his job or his hours are cut?

 

Secondly, I don't have the extra money laying around. We couldn't plan for this because the old tax collection agency didn't work this way.

 

Third, the tax is being taken out of his check by his employer. Wouldn't that mean we are paying the tax twice? That means they are getting a double payment from us! And how would we prove that we paid it twice and get half the money back?

 

Maybe I'm missing something. Maybe I'm not awake enough. I do the taxes in our family. I always have. I've never had a problem before. I've never lived in a city that requested this nonsense. Can anyone explain this to me?

 

Am I wrong for being annoyed at being expected to pay tax on money that hasn't been earned yet? Isn't this like me giving the city a loan at my expense?

 

I hate to sound ignorant, but I'm really not understanding how this works.

[Sherry in OH]

If your husband works in the city in which you live, don't worry about it. The local tax the employer takes from his check will go to the city.

 

If your husband works in another city, he needs to check with HR to be find out which city's tax they are taking. Depending on the cities, he may own in both.

 

Unless you have moved or your husband has changed jobs, chances are the taxes are already being deducted from his paycheck. (Paystubs and W2s are your proof of payment.) If you must file quarterly, you pay toward the end not the beginning of the quarter. So you would pay in March on money earned January through March, June for April through June, September for July through September, and December for October through December.

 

I hate Ohio's local taxes. We pay twice because we live in one city and DH works in another.

[Dawn in OH]

If your husband works in the city in which you live, don't worry about it. The local tax the employer takes from his check will go to the city.

 

If your husband works in another city, he needs to check with HR to be find out which city's tax they are taking. Depending on the cities, he may own in both.

 

Unless you have moved or your husband has changed jobs, chances are the taxes are already being deducted from his paycheck. (Paystubs and W2s are your proof of payment.) If you must file quarterly, you pay toward the end not the beginning of the quarter. So you would pay in March on money earned January through March, June for April through June, September for July through September, and December for October through December.

 

I hate Ohio's local taxes. We pay twice because we live in one city and DH works in another.

 

 

Thank you Sherry! It makes sense now. We live and work in the same city. The taxes are being deducted from his paycheck, to the exact penny, and have been for the past 5 years.

[alpidarkomama]

The first problem I have is making payments on money we haven't earned yet. What if my husband loses his job or his hours are cut?

 

The same would go for your federal taxes. If someone is employed for 6 six months, then unemployed for 6 months they would have paid too much in taxes for the year. Then that person would get a refund. So the city tax is working no differently from the federal tax except that you're paying quarterly instead of monthly.