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5 Answers

Why would a second job make my tax refund go down so dramatically?

Asked by: lpliskin 1442 views YA Discussion

This may be user-error on my end trying to do my own taxes and maybe I should just take them to a tax place, but I have a question. I took a part time job in additional to my full time job in March of last year and made about 5K at the part time. Turbo Tax Federal Edition said my refund would have been about 600 dollars with just my full time. I entered the information for my part time, and my refund went down to 70. That is SEVENTY dollars from 600. Is this even possible???? Should I have someone else look at my taxes?

Thank you!! :)

5 Answers

  1. Dan H on Mar 16, 2012 Reply

    Do make sure you are filling out the tax forms correctly.

    But, part time jobs don’t withhold much money for taxes compared to full time jobs. It’s because the part tiime employer doesn’t take into account that you are making a lot more money somewhere else.

    You may also have put yourself into a higher tax bracket by working the extra job, unlikely in that you only owe another 500 dollars.

    I’m betting on the withholding angle. The second job employer withheld money based on an income of 5000 for the year.

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  2. R K on Mar 16, 2012 Reply

    you made more money and didn’t pay enough tax on it during the year. when you make more money, you need to fill out another W-4 to make sure you have your employer take out enough tax.

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  3. Quick Answers on Mar 16, 2012 Reply

    Optical illusion based on the design of the software.

    Every brand of tax software jumps the gun on guestimating your refund. Enter the first W-2 and they post the estimate. Enter the 2nd W-2 and they rerun the calculation. The problem is, they shouldn’t have bothered doing an estimate until after every single bit of income had been entered.

    Each W-2’s withholding is based on that job’s W-4. If you put single/2 on each W-4, you implied that you were entitled to 2 exemptions and 2 standard deductions. The software used the only ones you got against the first W-2 entered and nothing was “left” for the second W-2. The second W-2 is also going to look like it’s taxed at a higher rate.

    You could, but there is no point, go back and enter the W-2s in the opposite order. You’d still end up with a $ 70 refund, but maybe it might feel different.

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  4. mrreliable3599 on Mar 16, 2012 Reply

    Your tax liability for one W2 is based on allowing a standard deduction plus an exemption amount. These amounts reduce your taxable income by close to $ 10,000, and that would contribute to a big refund.

    When you take a second job, your second income does not get the benefit of your standard deduction and your exemption amount. In a real sense, because you used up those income reductions, you’re taxed much more heavily on the second job.

    And, as you keep working hard and earning more money, that tax hit is going to keep going up.

    Earn the money, you’re better off. Just get accustomed to giving more, and more, and more of each extra dollar you earn away.

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  5. Judy on Mar 16, 2012 Reply

    Definitely possible. You used up your standard deduction and your exemption on whichever job you entered first into the software, so ALL of the second job is taxable starting at whatever bracket the first job left off. When the part time job was withholding taxes, they withheld like that job was your only job, so probably withheld very little.

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