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Can I expect a significant difference in my tax return in 2009?


I asked this earlier today, but nobody answered it.

I make about 50K a year, and have been at my job for about 4 1/2 years. I am this year, for the first time since being there, contributing to my 401K. I'm maxing out my investment at 10%. Raises at my company are only 3% cost-of-living increases across the board for all employees (there are no incentives, bonuses, etc.).

This year, I got a nice tax return at a little more than $1600 (single, no dependents). Can I expect a larger or smaller return next year, because of my 401K investment, or will it make a difference?

http://answers.yahoo.com/question/index;...

All other things being equal, your taxable income for 2008 will decrease by whatever contribution you make to the 401(k).
Suppose in 2007 you grossed $50K and paid tax on that amount. Suppose in 2008 you contribute $5K to the 401(k). Then your taxable income will be ($50K +3% raise) - ($5K) = $46.5K. Your tax will be calculated based on that income, so you should pay less total tax.

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