Why do I owe so much in taxes this year?

Question

Last year my wife and I got about $1300 back from the govt. in tax return. This year, after entering everything in TurboTax, it says we owe $800! I make the most money in our household at around $31k/year, and she only brought in about $12k. After entering just my W-2 information it said we were getting a $150 refund. After I entered all of her W-2s, we were up to owing around $800! It's almost like the govt. is punishing us for her not making much money. How were they going to give us $150 refund on my income, but then we I enter her much lower income, now the man wants to stick it to us by making us owe money we won't have? I don't know how I'm going to come up with $800 by tax time considering I have no money leftover at the end of each month as it is now!

Answer 1

It's all about the witholding. Since you are filing jointly, that last $12k is being taxed at the highest rate by the IRS, being that we have a progressive tax system, but the withholding throughout the year was much too low.

Go back and look at her W-2 and look at how much was withheld. It probably should have been around $2,400 to have covered the additional tax. Was it?

To solve this problem for next year, one of you should bump up the withholdings by filing a new W-4 and claiming one less exemption.

Answer 2

When you file jointly, you get better tax rates than if you were filing as single, but the two exemptions and the standard deduction are already deducted when you have the first W-2 entered, which gives a misleading idea since they actually apply to theTOTAL of both incomes, which you hadn't entered yet.

If nothing much changed, and you both made around the same this year as last year and had about the same amount withheld, look at the two returns and see what's different - that's a lot of change if everything seemed to be about the same.

Answer 3

Laissez-Faire Guy, you are way too funny. For a married couple filing jointly, at the husband's income of $31K, this couple was at the 15% tax rate, with the add'l $12k for the wife, they were still in the 15% tax bracket--that bracket is $15,100 to $61,300. So, their tax rate didn't increase--the problem lies within the deductions taken during the year. My guess, without knowing the Fed tax w/h from the husband's income and how much was w/h from the wife's income, is that not enough was withheld from the wife's income. The caveat is that you want to withhold the least amount without owing any money at the end of the year because what you get back is money that Uncle Sam used without benefitting you. So this year take a look at what happened last year and up the deduction on yours or your wife's income. I have a question--are you wanting your wife to quit her job that benefitted you by $12K so that you don't have to pay Uncle Sam $800??

Another question--do you have a single 50ish brother looking for a single stay-at-home woman that thinks like you?

Answer 4

Double check the entry of the W-2's and make sure the tax withheld info is correct. Did your wife's employer withhold tax from every paycheck? I agree it sounds like a huge turnaround after your wife's W-2 info was entered. If the employer did not withhold enough tax have your wife adjust her withholding for this year. Good luck.