Huge (for us) tax bill. What went wrong?

[Anonymous]

DH and I are doing our taxes and we owe about $25k which is shocking. We make around $230k pre tax and take the standard deduction.

We both claim all 0s and pay several hundred dollars a pay period extra.

In theory we should be paying an extra $2k per pay period per month right to the IRS?

Here is the kicker, we have a huge disparity in income. My DH only makes $40k and by increasing our withholding it gets to the point where it's silly for him to even work. He carries no benefits for us and his employer doesn't do a traditional 401(k).

I know more information is probably needed, but any ideas on what we are doing wrong. This was quite the gut punch.

[Anonymous]

Anonymous wrote:DH and I are doing our taxes and we owe about $25k which is shocking. We make around $230k pre tax and take the standard deduction.

We both claim all 0s and pay several hundred dollars a pay period extra.

In theory we should be paying an extra $2k per pay period per month right to the IRS?

Here is the kicker, we have a huge disparity in income. My DH only makes $40k and by increasing our withholding it gets to the point where it's silly for him to even work. He carries no benefits for us and his employer doesn't do a traditional 401(k).

I know more information is probably needed, but any ideas on what we are doing wrong. This was quite the gut punch.

That's probably how this happened. I forget the details, but in figuring out withholding on W-4, I recall this makes a big difference.

[Anonymous]

This happened to us too. Apparently the IRS changed the W4 a couple of years ago and we both only had around 10% taken out when we're in the 24% bracket. I found the new form complicated - you have to do some worksheet and enter in all these values, for each person. In the end I gave up and just elected more to come out equal to 15% withholding.

[Anonymous]

The IRS has a calculator that lets you input the information from your two most recent pay stubs and add anything else additional such as potential stock sales or business income. You can use that to estimate your taxes and increase your withholding and/ or make estimates tax payments

[Anonymous]

Did you fill out the withholding as "married filing jointly"? You probably needed to check "married withhold at single rate."

[Anonymous]

Did you calculate filing separately vs jointly?

[Anonymous]

Anonymous wrote:Did you calculate filing separately vs jointly?

Yes we just tried that. It’s Appearing that the higher earner (me) owes the whole $26k. Apparently I need it be paying an additional $2k a pay period?

[Anonymous]

I just tell the IRS how much to withhold. If I owed 25k. I would just add 2k each pay period. The IRS knows nothing about your investments.

[Anonymous]

Anonymous wrote:I just tell the IRS how much to withhold. If I owed 25k. I would just add 2k each pay period. The IRS knows nothing about your investments.

Dear lord, that’s about the equivalent to what my DH brings home a month. It’s not even worth him working as we are losing then $35k a year on childcare.

[Anonymous]

This just happened to us too? My Dah owes like $30,000. I am a govt employee and I think my withholding is now too small? He pays quarterly. We file jointly. Never happened before this year.

[Anonymous]

DH not Dah

[Anonymous]

Anonymous wrote:

Anonymous wrote:I just tell the IRS how much to withhold. If I owed 25k. I would just add 2k each pay period. The IRS knows nothing about your investments.

Dear lord, that’s about the equivalent to what my DH brings home a month. It’s not even worth him working as we are losing then $35k a year on childcare.

But you will still owe most of that if he quits. That sounds like it’s primarily the tax burden on your income. It’s not as if him quoting will reduce your tax bill by $40k.

How much was withheld?

Also, I do have sympathy because something similar happened to me last year and I had to double my withholding mid year to get close to our expected taxes. Very frustrating.

[Anonymous]

Anonymous wrote:This just happened to us too? My Dah owes like $30,000. I am a govt employee and I think my withholding is now too small? He pays quarterly. We file jointly. Never happened before this year.

That’s interesting. We owed about $6k last year and our salary didn’t change much. Maybe increased $5k due to a COL adjustment. The number is simply staggering that it would change that much year over year.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I just tell the IRS how much to withhold. If I owed 25k. I would just add 2k each pay period. The IRS knows nothing about your investments.

Dear lord, that’s about the equivalent to what my DH brings home a month. It’s not even worth him working as we are losing then $35k a year on childcare.

But you will still owe most of that if he quits. That sounds like it’s primarily the tax burden on your income. It’s not as if him quoting will reduce your tax bill by $40k.

How much was withheld?

Also, I do have sympathy because something similar happened to me last year and I had to double my withholding mid year to get close to our expected taxes. Very frustrating.

You’re right. False equivalents. Just over here freaking out. Increasing our paying $2k a month means we will be in the red every month.

[Anonymous]

OP add up what you’ve withheld and what you owe and divide it by your income. Does the %age look crazy or about right?