FreeTaxUSA Says I Owe $3K in federal taxes. I NEVER owe & always get a refund. Please HELP!

Submitted by nbny90 t3_10po8lk in personalfinance

Doing my taxes for the year as I normally do and I cannot understand why I owe this much money. I always get a decent federal refund. I don't even know what to type or include right now because I'm beyond frustrated. I didn't change anything on my W4's, no job changes or huge bonuses/salary increases. Second son was born on New Year's Eve 2022. I don't know what happened! Can someone please help me try to understand this? I'll include what I can and think might help from my W2.

Filing Status: Married, Filing Jointly, Do Not Claim Dependents

HAVE 2 KIDS

My W2

Box 1 (wages & other compensation) : 81,459

Box 2 (federal income tax withheld) : 5,988

Box 3: (social security wages): 95,891

Box 4: (social security tax withheld). 5,945

Box 5: (medicare wages) 95,891

Box 6: (medicare tax withheld) 1,390

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WIFE's W2 : Box 1: 62,163

Box 2: 3,858

Box 3: 65,930

Box 4: 4,087

Box 5: 65,930

Box 6: 956

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TIA

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Edit: I cannot thank you all enough for giving me your two cents regarding my situation. If you want to throw in a couple more cents my way to help me pay for this I'm taking donations! I can joke about it now, but hate that I have to pay this much back to uncle sam. THANK YOU THANK YOU THANK YOU! Reddit Rocks!

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Werewolfdad t1_j6lk1x7 wrote

Looks like you both selected married filling jointly on your w4 and failed to complete step 2

Numbers check out as such.

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Mysunsai t1_j6lkhs3 wrote

At $143k of income with two kids you’d expect to owe about $$13k in taxes. You paid about $10k in taxes. It all looks correct.

How did you and wife fill out your w4?

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nbny90 OP t1_j6lldl4 wrote

My wife files a Married filing jointly as well. However, she claim's 1 dependent.

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Mysunsai t1_j6llqib wrote

Are you saying you only put married filing jointly, and did not fill out the multiple job worksheet in step 2?

Then that’s your problem. You guys have 2 jobs and failed to inform your employers to withhold as such.

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nbny90 OP t1_j6lm2v1 wrote

I wasn't aware I had to do this. We've had two jobs since December of 2020 but this multiple job step 2 stuff you're bringing up is new to me. Could you please clarify?

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Mysunsai t1_j6ln6ht wrote

Just read the instructions for the W4.

If you put married filing jointly, your employer withholds as if you have $25k standard deduction, $20k at 10%, $60k at 12%, etc. Which is correct, those are the tax brackets for married filing jointly.

But if you have multiple jobs (eg both you and your wife work), then combined between your jobs your withholding looks like you have $50k of standard deduction, $40k at 10%, etc. So you massively underwithhold.

The solution is to follow the instructions in step 2 for multiple jobs. (Or alternatively, you could both select single instead of married filing jointly).

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nbny90 OP t1_j6lnu2r wrote

Follow up questions...

  1. Can we change status back to "single", even though we're married?
  2. When filing taxes next year, do I enter our filing status as "single"? Or "married, filing jointly"?

Thank you so so much for making this easy for me to understand.

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Ghost_of_JFK t1_j6lojtm wrote

You can change your W-4 to single to increase your withholding. Doesn’t matter if you are married or not. This is basically just a way to tell your employer what to withhold.

When filing taxes you will still go with married, filing jointly (or married filing separately in rare cases).

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scherster t1_j6mp4ju wrote

You can also just add an amount to be withheld from each check. I think that's easier than messing around with entries on the W4.

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BouncyEgg t1_j6llkij wrote

> However, she claim's 1 dependent.

"Claiming" things is no longer a thing and hasn't been for a few years. Update your W4. If your employer still has exemptions listed as an option, it's very very very behind the times.

If you haven't updated your W4 in a few years, both of you should update it.

And pay attention to Step II of the new W4.

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nbny90 OP t1_j6lm735 wrote

FML. My employer didn't explain this, but I should've been more on top of this as well. Thank you and will be doing this ASAP.

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MarcableFluke t1_j6ll9jy wrote

>Can someone please help me try to understand this?

You both filled out your W-4s as if you were the only job holder. If you have a dual income household, you need to either both check box 2c or input an appropriate amount into 4c to account for the dual incomes.

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fixin2wander t1_j6lm4w8 wrote

If you say married filing jointly without going to the next steps they assume you are the only income earner. Taxes are withheld so that it is like that is the only income for two people combined versus each having an income and therefore you end up under withholding.

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BlazinAzn38 t1_j6lk4w2 wrote

So you should have one child to claim on your taxes for the credit correct? That being said you did under withhold by that $3K amount according to what we know right now

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nbny90 OP t1_j6lkf66 wrote

I can claim 2 children. My 3 year old and my 1 month old son (born on 12/31/22).

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BlazinAzn38 t1_j6ll0iy wrote

Oh yeah I brain farted my bad. Yeah with the two kids you owe ~$3300 excluding any retirement contribution deductions or any other misc. credits. It looks like you both selected “Married filing jointly” on your W4 without doing Step 2/work on Page 3.

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nbny90 OP t1_j6lljno wrote

We both have married filing jointly.

I do not claim any dependents on my W4 and everything else looks like it's zero.. She claims 1 dependent on her W4 and everything else is 0

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BlazinAzn38 t1_j6llo4x wrote

But did you indicate you both work on each of the other’s W4? If not each of your incomes is being treated as the sole income for two people when in reality there are two incomes.

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apatrol t1_j6lmkrs wrote

Lots of folks took off dependents for the two years of extra covid child tax credit. Them didn’t put it back. This is the third or so post today just in this topic.

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Salogy t1_j6lk10n wrote

I made way less than you and my employer withheld $8k in taxes last year for federal income tax.

I would compare this year's taxes with your taxes from last year to figure out the difference if you made the same the past two years.

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nbny90 OP t1_j6lk9xk wrote

I just looked at that. Last year they withheld $11,500 in federal taxes.

This year only $5,988 was withheld and I don't know why!

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Its-a-write-off t1_j6llkwi wrote

Your w4 was switched to the married withholding rate.

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nbny90 OP t1_j6lmmlu wrote

And I'm not supposed to change it back to single once it's in this rate, correct?

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MarcableFluke t1_j6lnjp5 wrote

No, you can set it to single. Or you can check box 2c, same thing at your income level.

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Kun17 t1_j6lu47r wrote

Checking box 2C withholds more federal taxes?

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