Payed so much in taxes

leah233

Wed, Apr 18 2018, 7:00 am

It makes sense unless you were both working on W-2s and already had a lot of withholdings

Maybe you should redo your W-4s not to have to pay so much when you file.

amother

Mistyrose

Wed, Apr 18 2018, 7:02 am

If you didn't pay in enough it's definitely possible. You have to change your W-4 so your employer takes out more taxes. If both of you are working and you both included your kids on the W-4 you're double counting them because you only get one deduction for each kid on your joint tax return.

amother

Gold

Wed, Apr 18 2018, 7:30 am

Well if you only paid $2,500 - you must have a really great accountant :-)

hard to know what went wrong, if anything, without more information. Though as others have suggested 'underwithholding' is usually the culprit.

observer

Wed, Apr 18 2018, 7:35 am

Do you have taxes withheld from your paycheck and had to pay 2500 in addition? How much total?
If you are only paying 2500 total, that's quite little.

chatz

Wed, Apr 18 2018, 8:02 am

If you're only paying $2500 on $100,000 income, then you're great.

If you have to pay an additional $2500 after having estimated taxes withheld from your paycheck or having paid estimated taxes during the year, then someone messed up. If you have income withheld, it would be a good idea to give your employer a new W-4.

You would have to ask whoever did your taxes where the lack was.

Keep in mind that if both you and your husband are employed, if you both claim all the exemptions (ie, 4), you will have too little tax withheld. Generally, you split the exemptions or the person with the higher salary takes them (and the other spouse uses 0).

Also, if either of you are self-employed, you need to pay self-employement tax.

chatz

Wed, Apr 18 2018, 8:11 am

To illustrate:

$100,000 income from a regular job (not self-employed)
-12,700 standard deduction
-16,200 Personal exemptions ($4050 for each of you plus for each child)
$71,100 Taxable Income

$9732.50 Tax on the above income
-2,000 Child tax credit
$7732.50 Tax to be withheld during the year from your paycheck

In a straight situation, you would have paid $7732 tax during the year. If you have to pay $2500 now, it means you underpaid during the year.

There are a lot of other factors (other credits, itemized deductions, other types of income), so your tax return may not look like this.

amother

Aqua

Wed, Apr 18 2018, 8:29 am

TO clarify my husband is listed as self employed and works for two started New York and New Jersey

amother

Pumpkin

Wed, Apr 18 2018, 8:34 am

Does he withhold taxes throughout the year? My paycheck for example, has $0. Withheld. (1099) so it is my choice to either take off a percentage of my income and save it for tax season, or pay one lump sum when it is due, on all my earnings that year.

amother

Gold

Wed, Apr 18 2018, 8:48 am

amother wrote:

FYI at some point the IRS will be looking for you to pay estimated taxes (ie its 'due' 4 times a year).

amother

Gold

Wed, Apr 18 2018, 8:50 am

amother wrote:

TO clarify my husband is listed as self employed and works for two started New York and New Jersey

So he does not have payroll tax taken from his pay - certainly makes sense he needs to pay tax with his tax return.

chatz

Wed, Apr 18 2018, 8:59 am

Ouch. Ignore my above example. That was not self-employed and only federal income tax.

So I'm definitely sure you've been paying tax throughout the year. Self-employment tax is slightly less than 15% (regular 7.65% employee + matched 7.65% employer less some deduction).

So,
federal income tax
federal self-employment tax
state income tax (you shouldn't be paying double but you would have to file in both the work state and resident state)

Just federal taxes could be around $20K.

On a good note, with the 2018 tax reforms, federal income tax should be a bit less.

chatz

Wed, Apr 18 2018, 9:03 am

amother wrote:

It is not really your choice. You would be expected to pay quarterly estimated taxes if you expect to owe the IRS more than $1000 at year end. I don't think you need to pay quarterly taxes the first year, but afterwards - you do.

Miri7

Wed, Apr 18 2018, 9:04 am

Our cpa warned us that next year our taxes will go up quite a bit. We live in a high tax state and pay astronomical property taxes on our house. This tax reform will not be good for us.

mommyhood

Wed, Apr 18 2018, 9:12 am

chatz wrote:

If one spouse gets a W-2 there's also the option of having more taxes taken out of their paycheck to cover the other spouse. I was told the IRS won't fine as long as you withhold at least the amount you owed the previous year.