Under withholding- anyone else have this problem?

[Anonymous]

Doing the taxes this weekend and it's looking like we're going to owe an additional $8k. We've been having this problem each year and it keeps getting worse. I already have an extra $1500 per paycheck withheld, but it's still not enough. I think it's because an increasing amount of our income is coming from bonuses that are withheld at 22% and investment income that doesn't have any withholding, while our marginal rate is 35%. Is there a way to get your employer to withhold bonuses at a higher rate? Or is the only thing to do to increase our regular withholding even more?

[Anonymous]

You can mail in "estimated tax payments" on a quarterly basis. It might or might not be more convenient, but the option exists.

[Anonymous]

We also have this problem. I just keep increasing our additional withholding. I’ve also changed what assets I hold in my brokerage account so they don’t spin off as much interest.

[Anonymous]

We owed $11k last year because dh retired from the military and didn’t properly set up his withholding on his retirement pay. We also have investments that generate income that create tax liability. I just increased the withholding on my own pay and I think we’ll be okay this year.

You can ask your hr people if you can increase withholding on bonuses. Theoretically that should be easy enough for them to do.

[Anonymous]

Thanks OP for posing this question as it's something that has been increasingly impact us. Advice above seems solid, but no you aren't the only one who has this problem. The increased SALT cap helped to counter it this tax year.

[Anonymous]

I have this problem due to a lot of RSU compensation and vesting. I have just learned to set aside the extra cash.

[Anonymous]

We have to pay estimated taxes quarterly because we have a lot of investment income.

[Anonymous]

Anonymous wrote:You can mail in "estimated tax payments" on a quarterly basis. It might or might not be more convenient, but the option exists.

This is the way.

[Anonymous]

Anonymous wrote:Thanks OP for posing this question as it's something that has been increasingly impact us. Advice above seems solid, but no you aren't the only one who has this problem. The increased SALT cap helped to counter it this tax year.

Same. The new SALT saved our butts this year. Went from $50K owed down to $20K due to SALT. Mostly due to 1099 income that we didn’t prepay taxes on and RSUs being under-withheld.

[Anonymous]

I upped my 401k withdrawal by a bit and that helped me owe a bit less. But you also might just need to adjust your withholdings all year long to account for this. There should be a calculator on the IRS site.

[Anonymous]

You're going to have to pay and underpayment penalty.

Do the estimate on the IRS website.

[Anonymous]

Anonymous wrote:You're going to have to pay and underpayment penalty.

Do the estimate on the IRS website.

The penalty is tiny though. We used to owe huge amounts 20-50k and the penalty was a joke. Now our employer lets us pick how much extra to withhold over the supplemental rate so we do that.

You should either elect for extra withholding, remove and exemptions, or worst case you could do estimated taxes to avoid the small penalty.

The supplemental rate jumps up to 37% once you make more than 1M for the year too, which limits the amount of error for W2 employees making variable income and large bonuses.

[Anonymous]

Omg we are going to have this same problem. Dreading finding out how much we owe.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You can mail in "estimated tax payments" on a quarterly basis. It might or might not be more convenient, but the option exists.

This is the way.

This was the way. The way is https://www.irs.gov/payments/online-account-for-individuals.

[Anonymous]

Anonymous wrote:We have to pay estimated taxes quarterly because we have a lot of investment income.

I do this and its a PITA lol. But I guess it's a good problem to have.