I don't own a house, I'm not married (but I will be by next tax season), I have no stocks or bonds. Buying a new car and paying student loan interest was the only deductions I could put down. I work a job, pay my bills, and live a pretty ordinary life. This tax season, Turbo Tax says I owe the government $600+ and the state of Colorado $150+.
What can I do through out this year so that next year I don't owe a thing?
You get back what you overpaid and owe what you underpaid. So the simple answer to your question is: Just pay more taxes during the year, whether through paycheck deductions or estimated tax payments or something. The easiest way to do this is to adjust your W-4 to decrease your number of exemptions and/or specify an additional amount to withhold.
By the way, it's better to owe a little when you file your taxes than to get a refund. When you get a refund, it means you overpaid during the year, so you are giving the government an interest-free loan and am only getting it back later -- money you shouldn't have had to pay in the first place. On the other hand, when you owe taxes (as long as it's not enough to trigger a penalty), you underpaid during the year and the government is giving you an interest-free loan until tax day.
Invest in an IRA, you can still do one for 2014 and for 2015 use your 401K if you have one. If low income you can get a savers credit.
If you simply want a refund change your W4 to read S-0 plus $50 and they will take from the chart and take $50 a payday you can get more of your money back if you have them take 100 a payday. If you were paid weekly you could get 5K that way as a interest free loan to the government, try 200 a week for a major refund you can brag about if you have friends.
Regarding getting married. The key date is December 31st. If you are married when the calendar years ends the IRS treats you as being married for the entire year.
Having to pay a small amount at the end of the year is fine. You can make fine tuning adjustments during the year by changing the number of allowances. Getting a huge refund is a loan to the government. Owing a lot of money may result in penalty.
The tax problem with getting married is that the withholding at the single rate for most of the year can be an issue when you file as married.
One way to avoid the underpayment penalty is to make sure you meet the safe harbor rules:
If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they either owe less than $1,000 in tax after subtracting their withholding and estimated tax payments, or if they paid at least 90% of the tax for the current year or 100% of the tax shown on the return for the prior year, whichever is smaller. There are special >rules for farmers and fishermen, certain household employers and certain higher income >taxpayers. Please refer to Publication 505.
You will need to check the rules for high income tax payers to see if you fall under those rules.
The "100% of the tax shown on the return for the prior year" rule is proabably easiet to understand:
You will probably owe something, the question is what can you do so that you don't discover that when preparing your tax return after the year ended.
Generally, the best suggestion would be to calculate your allowance properly on the W4 you've submitted to your employer. In your case, if you had done the math right at the beginning of the year - your withholding would match your tax liability fairly well with a chance of a slight refund.
Since next year you're planning on getting married, getting it right with W4 for 2015 will probably be tricky, but once you're married - do that, based on the numbers for both of you.
