I’ve slacked a little bit this year on filing my tax return, but I basically finished up tonight. I’m using the TurboTax online service, which guides you through the process of entering the numbers from your forms and finding deductions, etc.
As you enter your data, a little ticker displays your estimated tax refund/bill. As I went through, the number was WAY different than last year, and I had a pretty good idea that this year would be similar to last year. Nearly in tears, I found my final “refund” amount was going to be almost $8000 less than last year…
I discovered the problem was in entering my W2. In boxes 12a-12d, each have a “letter code” and an amount. Even though I’ve filed taxes for years, including the last 4 using this same system, there was a mistake this time. Box 12a defaulted to letter code of A, and box 12b defaulted to B. Sure, that looks fine, right? In fact, box 12b should have been code “D”, not “B”, so all the money I contributed to my 401k was being reported as “uncollected medicare tax on tips”, not “elective deferrals to 401k”. As a result, that amount was going straight to my tax bill, instead of reducing my taxable income.
Ok, disaster averted. I guess I’ll tell Evan he doesn’t have to go to that job interview tomorrow!
… Ouch! It’s always a huge relief when you discover it’s something so … small. I did my brother’s tax return, and discovered he owed about $2000. Until, that is, my mother realized she read his 1099 wrong, and he only had $2000 of self-employment instead of $9000. Oops.