Taxes

February 15, 2016 5:07 PM

For the past 5+ years I've owed small amounts of Federal income tax, $5-$11. Why not this year?

I've worked at the same employer since 2008. I don't have any student loans or other sources of income, I have no investments, and no state income tax. Only one W-2.

The past few years I've owed really small amounts of money at the end of the year.

I accidentally began filing on a service that isn't free in Washington (EX Tax or something) and the service indicated I owed $7 to the IRS. Since it wasn't free in WA, I went through the pretty simple process with another service (Tax Slayer) and at the end of the process Tax Slayer indicated that I didn't owe any extra money.

Why is there a discrepancy between services? Both are linked by the IRS website and presumably do the same math under the hood.

posted by kittensofthenight to Work & Money (10 answers total)

$7 is possibly small enough to be a rounding error. If you made $10k, it woud be .06% of your yearly salary.

I wouldn't worry about it. The IRS is not coming after you over $7.
posted by RustyBrooks at 5:14 PM on February 15, 2016

I haven't used ExTax, but is it possible it was a misleading UI and they were including their fees in what you "owed"?
posted by the agents of KAOS at 5:14 PM on February 15, 2016

Actually it was FreeTaxUSA that I used initially, I guess the IRS website shuffles which service is listed first. No indication it wasn't free for WA residents.

I know that FreeTaxUSA visibly rounded numbers to the dollar as I input them, but with only one W-2 that is a super small amount.

Yeah I probably shouldn't worry!
For no good reason I really hate that there is a fee to pay via debit card, and the fee is almost the same as the amount owed.

(Again not a big deal but I've been thinking about it for a long time.)
posted by kittensofthenight at 5:26 PM on February 15, 2016

I would not really assume that the math is identical, either. Taxes are complicated, opinions vary on how any particular provision should be applied, and mistakes are made. I once worked on a project that calcuated taxes on stock transactions, and one particular tax was given the wrong sign for at least 6 months. No one ever noticed. (That is to say, it was subtracted instead of being added, so the sum was wrong by a little bit)
posted by RustyBrooks at 5:29 PM on February 15, 2016

Tax brackets are indexed to inflation, so that each year the thresholds for income in the 10%, 15%, 25%, etc brackets increase. If your income does not increase at the same rate of inflation, then your taxes will go down slightly each year.

For example in 2014 the first $9075 of income was taxed at the lowest rate. In 2015 the first $9225 is taxed at the lowest rate (single filer).
posted by JackFlash at 5:29 PM on February 15, 2016

I know that Social Security income, also tied to inflation, didn't increase in 2016, perhaps thats why I don't owe the small amount this year, but it was still weird that two different IRS approved services would have different outcomes.
posted by kittensofthenight at 5:32 PM on February 15, 2016

Social Security's tie to inflation is expressed not in the rate getting higher, but in the increase of the ceiling beyond which Social Security tax is not paid. (Social Security taxes are capped because Social Security benefits are capped, and Social Security is not supposed to be a form of redistribution but an earned-ish benefit.)
posted by MattD at 5:58 PM on February 15, 2016

I meant SSI for people that are disabled and never paid into social security, but thats not relevant here.
posted by kittensofthenight at 6:12 PM on February 15, 2016

You're right, there shouldn't be a discrepancy or rounding errors, especially in such a simple return. With one source of income and (I'm assuming) few or no adjustments or itemized deductions, there's really not a lot of different ways to do the math. Do you remember one of the programs asking you questions that the other didn't? It's possible one identified a small tax credit or something, but you would have likely noticed as you went through.

If your taxes really are as simple as a w-2 and the standard deduction, it should be very easy to figure out the correct amount of tax owed without the tax software. If you aren't comfortable with calculating it by hand, one of the paycheck calculators should give you a standard estimate. Go with whichever program provided the correct amount.
posted by exutima at 7:10 PM on February 15, 2016

Many tax programs will offer you a filled-in 1040 for your records. If these two do, then you should probably just look to see how the two documents they produce differ (they should give you the same AGI, but it's possible they compute your tax differently, if one uses the table and the other the worksheet, say).
posted by jackbishop at 7:37 PM on February 15, 2016