Teach this dummy some IRS techniques

[Mike80911]

Not much advise to add but if I only paid 11K at the end of the year in addition to my quarterly payments I would be thrilled. But as already mentioned start a 401K and max out you can't touch it for a while but better in your account than theirs.
MD I am also curious how did the LLC make a difference as opposed to 1099?

[MBAtarga]

I took it that the OP had to pay an EXTRA 11k previously, and ONLY an extra 5K this past year.

[jwasbury]

Originally Posted by widgeon13

Are you fully funding and IRA and 401K? If you aren't, you should be.

Those two will reduce your AGI and consequently lower your taxes. You keep the money in hand and pay tax on it when you start taking it out.

Better to pay yourself than the Freakin IRS! No brainer in my book.

^very true. Maxing out 401(k) contributions should be top of the list for any of us wage-slaves. Assuming your employer makes matching contributions, if you do not max out you are leaving money on the table.

If you participate in an employer sponsored 401(k), IRA contributions deduction phases out beginning at AGI=96k and is fully phased at AGI=116k.

[Hugh R]

That is how I took it as well. People who get big tax refunds, should plan better. My taxes are pretty much a wash coming April 15, with me getting something back from the Feds, and owning the state a few bucks.

[WIL84911]

Originally Posted by MBAtarga

I took it that the OP had to pay an EXTRA 11k previously, and ONLY an extra 5K this past year.

Correct. That's because 2013 wife had max exemptions. 2014 she brought it down to zero but not both jobs.

[motion]

The IRS allows you to take losses on a business for a certain number of years. Its a no-brainer. Pick something related to a hobby that you spend money on, and start channeling your expenses legitimately in that direction. You'll be surprised at how fast it will add up. The barriers to creating a business are very small these days. Another no-brainer is a rental property or two. The depreciation (which I don't really understand that well) is a great way to offset income. Its been magical for me. I pay my accountant over $1,000 a year and have for the past 20 years. Its money VERY well spent!

[VFR750]

I track every years taxes and 1040 inputs in an excel spreadsheet. All deductions are logged

The irs uses a formula to calculated taxes. So you can predict your taxes based on the inputs.

Essentially I track my 1040 and predict next years liability

Now, each year is different, like you. I set a target tax, and set my w4 to match.

By July I repeat and make adjustments to my w4.

My goal is to only get back a small amount or owe a small amount.

Works for me

[jwasbury]

Originally Posted by motion

Another no-brainer is a rental property or two. The depreciation (which I don't really understand that well) is a great way to offset income. Its been magical for me.

^Careful with this one...losses on rental property are subject to passive activity loss rules. You can deduct the losses only to the extent you have passive income. If you have a lot of other investments which generate income, this is passive and the depreciation on rental properties can create deductible losses. For the "ordinary" wage-slave like me, losses on rental properties will not shelter our W-2 ordinary income because the wages are not "passive" income.

[nota]

see below

[nota]

Originally Posted by wdfifteen

I'm curious. How did that help your tax situation?

biz expense deducts to reduce the gross in ways not allow on a personal income tax return while keeping the standard deduct to personal income