- 3 Tricks to Create Premium Video Content on a Budget Entrepreneur
- Win the Talent War by Opting for Transparency Entrepreneur
Why do I owe so much in federal income taxes this year?
My wife and I made (combined) about $110,000.00 this year. We both claim 1 exemption each and married. We own a house and we also had a baby this year. I was just curious, so I just entered the W-2 information for myself and for my wife into TurboTax (filing married/jointly). We were immediately told that we owe about $3000.00. Now this is before anything else is entered as far as deductions go. But does this sound right? I just thought it was a little extreme.
Thanks in advance.
Thank you for all of the responses. To provide additional information, I made about 69K, with about 8K withheld in Federal income tax. My wife made about 43K, with about 4K withheld in Federal income tax. We both have 1 exemption for Federal.
I was just initially shocked because last year, I was making about 10K less with the same number of Federal exemptions, and I don't remember owing anything initially.
I haven't yet entered in any deductions and any of my child information, just my and my wife's W-2.
Very simply because you didn't pay in enough during the year through withholding. But since you didn't enter your deductions, etc. yet, you have not completed the process so any information on owing tax at this point is based upon incomplete information and is therefore irrelevant. Once you add in the missing information you'll have a reasonably correct answer.
Married couples often have too little withheld from their pay. The withholding tables are based upon the so-called "traditional" family with one breadwinner. Married couples need to sit down with a copy of Form W-4 and fill out the worksheets on page 2 to account for both incomes and any other income, deductions, exemptions and adjustments to their income.
The number of withholding allowances you come up with is the total that you should claim between you. If your incomes are nearly equal you can split them any way you wish. If one of your earns significantly more than the other, that person should claim all of the allowances and the other should file their W-4 as "Married but withhold at the higher Single rate" with 0 withholding allowances.
Since you don't mention how much you had withheld for federal income tax, there's no way to tell whether it's right or not.by Judy - 6 years ago
Your balance due is not relevant. Your tax due before prepayments is what is relevant. You also don't state if Turbo Tax has figured in child credit or if you entered itemized deductions. You may have a ways to go yet.by wartz - 6 years ago
I have always found it ludicrous that Turbotax (and it's competitors) display a running total of taxes owed/refunded as soon as you enter the W-2s. This is a 1040EZ mentality and if I'm doing a 1040EZ, I'm not buying TT to do my return.
TurboTax likes to take credit for showing you much it "saved you" by posting this number up front and then whittling it down as you progress through the tax return. The first time the tax amount is even relavant is after itemized deductions.... For all we know you paid $20,000 in mortgage interest! And that would be enough to bring the taxes owed to zero.
Also keep in mind with an income that high you might be subject to AMT. If so, some of your deductions will be disqualified.by travelguruette - 6 years ago