And the owing money comment was based on most of my friends in banking (including myself) owing money in their 2nd years onward. No real scientific explanation for it, think it’s mostly because of that large one-time bonus payment.

1) In the Retirement Plan Savings: I believe the IRA you mean to refer to is the Traditional IRA and not the Roth IRA. The contributions to the Roth IRA are after-tax dollars so it cannot be a tax shelter since taxes have already been paid on the contribution. The Roth IRA is essentially a shelter to future tax increases by the government (since the tax has already been remitted at a lower rate). Meanwhile, an after-tax contribution to a Traditional IRA is tax deductible in essence converting the dollar contribution back to pre-tax dollars thereby reducing overall tax liability. Like I said, I believe you meant to refer to the Traditional IRA. (There are other reasons for a Roth IRA that I do not mention since they do not pertain to the topic of tax shelter)

2) In the What Should I do: You say “In all likelihood, you will end up owning tax money if you’ve been working for over a year - that’s just the way the system works if you have minimal deductions” This is actually a false statement. When you file your W-4 at the beginning of the year, the withholding rate from the W-4 attempt to accurate mirror the tax liability a tax payer should actually owe at the end of the year. Of course, in a perfect world, the W-4 withholdings would be a perfect proxy of actual tax liability and when everyone files their taxes, they will find out that they paid exactly the right amount over the course of the year. Of course, we do not live in a perfect world and so this situation of the right amount paid over the year rarely occurs. The deductions at the end of the year (if you itemize or receive extra deductions like school interest payment), change in withholding rate due to a one-time bonus paycheck, life events changes (such having a baby (extra deduction) or marriage(wider tax bracket)), dividend interest, and/or capital gain skew the number one way or another. Nonetheless, the system is designed to try to be an accurate proxy of our tax liability and then once every year (the year after of course), we get to reconcile the number and bring order to the world. If you have any deductions, no matter how many, you should receive some income back from the government for overpayment (this is contingent on the fact that a proper W4 allows the government to have withheld the right amount). Trust me; the government wants their money earlier rather than later.

That’s enough rambling from me. Good past overall. Keep up the good work.