I just got my 2007 taxes back from the accountant. It’s bad. It’s really bad.

All in all, my 2007 tax obligation, including preparation fees, comes to just under $5,000 (of that the preparation costs were only $800 including the oil companies preparation costs).

I talked with the accountant last week, and after digging up my file, he told me the bottom line. After I scooped my jaw up off the floor, my next statement went something like this: “well, um, is there any way to lower that number?”.

After receiving my tax packet in the mail, it turns out there was a way to lower the number: by a measly $50.

So how can I fix this?

I’ve been on a war path researching how I can lower my tax obligation for 2008. I’ve turned up only one solid solution: Have more withheld from your paycheck.

2007 was the first year in nearly 4 years that both my wife and I had worked the entire year, making as much as we both do. Up until now, I’ve been claiming 2 on my W-4, which in effect tells my employer to withhold less from my paychecks. This worked out great when I was doing my consulting work in the oil field, and turned out nicely when I was single.

After talking to some coworkers who are in my same position (married, both working, making about the same amount my wife and I do), it turns out that they claim zero, have additional money withheld, and they end up getting enough back at the end of the year to have a nice night out on the town.

So I’ve made the change to my W-4, which means I’ll be bringing home less, and in turn saving less per month. But if it means that I don’t have to shell out 5 large to uncle sam at the end of the year, it may be worth it.

Anyone else surprised by your 2007 tax results?

Tags: Taxes | W-4 | withholding

Leave comments below. Subscribe to Comments