Why do I owe $400 in state taxes?

January 11, 2011 12:12 PM

StateTaxFilter: Last year I owed the state $3. This year I seem to owe the state over $400. Could this be an error, and, if not, why do I owe so much?

Last year (which was a partial-resident year) I owed the state of GA $3.

This year, according to TaxSlayer, I owe the state of GA $403, and I don't understand why.

I do not have an extravagant life. I work as a server. Box 1 of my W-2 is listed as 20592.29.

I'm thinking the state has been taking out too little of my paychecks. For example, one random pay-stub has 37.70 going towards federal taxes, 33.23 going towards social security, 7.78 going towards Medicare . . . and 0.59 going towards the state. Box 17 of my W-2 is 339.75.

Could something be askew or do I really owe the state $400 this year?

posted by fignewton to Work & Money (7 answers total)

It is highly possible your employer did not do your state withholding correctly. I've had troubles with more than one employer not properly withholding New York City income tax.
posted by ThePinkSuperhero at 12:19 PM on January 11, 2011

Georgia taxes incomes as follows:

Single return - One to five percent of the first $7,000 of net taxable income (total tax on the first $7,000 of net taxable income is $230) plus six percent of the excess of net taxable income over $7,000.
(Page 4)

Given that you're talking about income in the $20k range and allowing for the $2,700 personal exemption and $2,300 standard deduction, the total tax would be about $750. Assuming you have actually been withholding, a tax bill around $400 is entirely plausible.

IAAL, but IANYL, and IANAAccountant. Use TurboTax or something.
posted by valkyryn at 12:19 PM on January 11, 2011

I'm thinking the state has been taking out too little of my paychecks.

The state does not determine how much money is taken out of your paycheck, your employer does. Ask the person or department that handles the paychecks how they calculate the state taxes and let them know you would like more money held from yours. An extra $8 per week would be good, or maybe $10 to be on the safe side.

Also, run your numbers through another service to double check the numbers. You may have entered something wrong or there may be an error in the calculations.
posted by soelo at 12:23 PM on January 11, 2011

Do you report tips or does your employer? Maybe your employer is reporting the tips differently than you would.
posted by JJ86 at 12:38 PM on January 11, 2011

What was the income on that paystub you quoted numbers from, and was it weekly or biweekly? You can use that with the Georgia tax tables to see if they withheld correctly. I would agree it seems unlikely. Assuming weekly and 2 allowances and single, a $38 federal withholding implies $500 income, while a $0.59 GA withholding implies $150 income. Those should be in agreement and they aren't.
posted by smackfu at 1:36 PM on January 11, 2011

Same thing happened to me when I was a teenager working part time when I knew next to nothing about tax issues (i.e., only slightly less than I do now). Turned out I was being employed as an independent contractor and my employer was not taking deductions from my paycheck. Then Uncle Sam (or, this being Connecticut, Uncle Nutmegger, I suppose) came a-knocking.
posted by holterbarbour at 3:39 PM on January 11, 2011

This is totally possible. One of the problems you can have as a server is not making enough in hourly pay to have the proper taxes withheld for your hourly pay plus tips. When I was a server I often got $5 net paychecks for 25 hours of work for this reason. You may also have your withholding set wrong.

An easy way to keep track of this and avoid nasty surprises is to take your paystub at the end of three months and do the math for an estimated quarterly tax payment.
posted by SMPA at 7:08 PM on January 11, 2011