My husband and I both work and both claimed 0 on our W-4, but every year we owe taxes ...Together we make around $73,000 -- and this year we owed $1700! What are we doing wrong?
2007-02-22 02:01:05 · 13 answers · asked by aerobrit 1 in Business & Finance ➔ Taxes ➔ United States
That is because when your withholding is calculated, it is done on the assumption that your income (on your W-4) is the only income, while your husband's W-4 assumes his income is the only income. This is where the marriage penalty kicks in. What you and your husband needs to do is to file new W-4's with your employer, but when figuring out your withholding, you need to use the dual-income/dual-earner worksheet on page 2 of the W-4. It will determine the amount of extra withholding you will need to take out.
2007-02-22 02:10:43 · answer #1 · answered by jseah114 6 · 5⤊ 1⤋
You're not having enough tax withheld from your pay, plain and simple. This is very common with married couples if one spouse earns substantially more than the other does. The one with the lower income is not having enough tax withheld from their pay even when they claim zero withholding exemptions.
You should sit down together with 2 Forms W4 and complete the 2 worksheets on page 2. This will help you find out how much extra you need to have withheld from your pay.
With a shorfall of $1,700, you need to have an extra $33.00 per week withheld from your combined pay. If you're both paid bi-weekly, you could each have at least an additional $33.00 per pay period withheld for Federal income taxes and would about break even next year when you file assuming that your income stays about the same as it is now.
2007-02-22 03:16:09 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
Welcome to the real world of taxes. We are in the same boat. My husband and I both claim 0 and are withheld at higher single rates. We have an additional $70 a paycheck withheld from my husband's check so that we come close to be being even on taxes.
You can use a program like Turbo Tax to analysis your taxes and help you plan for the next year. We use it to help decide how much additional withholding we have to have taken out of our checks each year.
2007-02-22 02:11:53 · answer #3 · answered by debwils_4kids 4 · 1⤊ 0⤋
jseah114 is correct. You need to redo your W4's to account for each other's income. Right now, you're being taxed at the single w/no dependent rate and not enough is being withheld for the amount of money you make. Also, others mentioned itemizing. If you have medical expenses that are more than 7.5% of your AGI, you can itemize. You can also itemize charitable deductions (both cash and non cash), mortgage interest and real estate tax (if you own your home), and personal property tax on your vehicle(s). Redo your W4's while its still early in the year and if you're able to itemize, keep up with all your receipts.
2007-02-22 03:09:27 · answer #4 · answered by Carlover29 3 · 0⤊ 2⤋
You need to itemize your deductions if you aren't already. I'm assuming you don't have children? If not, your combined income is fairly high considering the average. It's not surprising that you're paying. This year, maybe you need to withhold extra from your paycheck each week to be sure you don't have to pay it all at once when you file for 2007.
2007-02-22 03:57:47 · answer #5 · answered by Mel 6 · 0⤊ 0⤋
This happened to me as well. Look for more deductions or have an additional amount taken from your paycheck each week. I have 10.00 taken out each pay period, but you may want to contact a CPA to come up with an amount based on your income. Your HR person will be able to help you with the paperwork. Buying property will also provide you with greater deductions. Did you make any donations to charities? As long as you have a receipt, you may use these as deductions as well.
2007-02-22 02:12:02 · answer #6 · answered by 1teacher 3 · 1⤊ 3⤋
Well maybe you guys make too much money. My dad told me lower income people usually end up getting money back on taxes and people who make more usually owe money.
Make sure you are getting money back for things. Your medical bills can give you tax breaks. So can your phone bills. My dad does my taxes every year and he thinks I can get 50 cents for every phone bill I find since I got married and I might not even need the phone bills to get it. Also, people get money back for donating money like to church. Also get money back for house payments I think. Look into that stuff and ask someone if you don't know.
2007-02-22 02:04:58 · answer #7 · answered by trishay79 4 · 1⤊ 3⤋
Key word is together is my bet. If one of you makes the majority of the income, the other income is not paying enough in. Your top taxable rate here is 20% if the other is 15 grand income then you are short 1500 bucks
2007-02-22 02:37:14 · answer #8 · answered by Rick F 2 · 0⤊ 2⤋
One of you should change your w-4 to Single. That way more taxes are withheld. And yes, the more money you earn... The more they take out !
2007-02-22 02:09:31 · answer #9 · answered by redjade_916 2 · 0⤊ 2⤋
welcome to the middle class. you can have more money taken out of your checks to avoid this in the future, or you need to get some deductions, like a house and/or a kid.
2007-02-22 02:05:49 · answer #10 · answered by mystery_me 4 · 0⤊ 2⤋