Owing taxes at the end of the year.

[surfingfire408]

My wife and I file our taxes each year as married filing jointly with three dependents. She is the the only income source for our family and she receives an annual pay scale increase each July. We recently found ourselves owing about $2,000 when we filed this year. After completing our taxes through turbo tax we received the prepayment forms to send to the IRS during this upcoming year. In June we will send in our second prepayment. My question is can we send in June's payment and then adjust her W4 to indicate what we would like held by her employer for the future? She is paid once a month. Our goal is to have the correct amount withheld so that we do not have to make prepayments in the future. If we had her W4 adjusted to withhold $200 per month going forward would that be the right way to go?

[mbpeddie]

The IRS requires you to pay your tax throughout the year. An employee should have enough tax withheld to cover 90% of their tax liability or 100% ( 110% if income exceeds 150K) of their previous years liability. Self employed persons are required to make quarterly estimated tax payments.

You must have received these vouchers as you had an amount due and did not meet the above thresholds.

To answer your question, yes you can submit a new W4 to your spouse's employer and increase the amount of tax withheld.

Here is the link to our W4 calculator where you can estimate the amount of tax you should have withheld or opt to have an additional amount held each pay. W-4 Calculator

Mary, tax expert

[Zachary_W]

Yes, for the current year you can update the Form W-4 to withhold the extra $150-200 per month from payroll since you owe $2,000 this year and want to avoid owing taxes on the next filing. Keep in mind any additional income earned compared to prior year. Any increase could affect your tax liability and the amount to withhold.  

Increase withholdings to cover shortfall and align with annual tax liability:

1. Estimate your total annual tax liability for 2025. Based on your recent filing, include the $2,000 owed plus your expected liability for the year.
2. Calculate monthly withholding: Divide the total annual tax liability by 12. For example, if your total liability is $24,000 that will be $2,000 per month. Adjust the Form W-4 to withhold this amount.
3. Use the IRS Form W-4 and the Withholding Estimator to determine the correct allowances or additional withholding amount. You can specify an extra $150-200 per month in the "extra withholding" section of the Form W-4. The extra withholding line item can be found on line 4c. 
4. Submit the updated W-4 to your employer before June to ensure the new withholding starts on time.

Additional Resources

• IRS Publication 505: Provides detailed worksheets and examples for tax withholdings and estimated tax.
• Form W-4 with Instructions
• TurboTax Withholding Estimator

Have an amazing day! Zachary W (CPA 9+ years)
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