Withholdings

[DSB33629]

I know you've most likely already answered several questions like this, so thank you and god bless ya for your patience in this forum, lol.

My wife and I both work, ages 56 and 58, she makes $90K and I make between $80-$110K (range includes quarterly bonuses) annually.  We both have claim 0 on our W-4s and end up owing a bit each tax year.  to eliminate owing anything, is it as simple as taking the amount owed from previous year (obviously things can change) and make that an extra cash amount withholding spread through the year?

Many thanks!

[SwapnaM · Accepted solution]

If your income, deductions, and credits remain relatively stable from year to year, then the amount you owed last year is a good indicator of how much you under-withheld. By taking that total amount and spreading it out as additional withholding over the year, you're essentially ensuring that the "missing" tax from previous years is now being collected. Enter this additional amount on line 4(c) of your W-4 form to increase your withholding. By increasing your withholding, you're less likely to fall short of the 90% current year / 100% prior year safe harbor rules for avoiding underpayment penalties.

Use the IRS Tax Withholding Estimator:

• This tool can help you determine the precise amount to withhold based on your combined income, filing status, and other factors. It’s especially useful for accounting for bonuses and other variable income. https://www.irs.gov/individuals/tax-withholding-estimator 
• https://turbotax.intuit.com/tax-tools/calculators/w4/ 
• How do you fill out Form W-4? 

@DSB33629 Thanks for the question!!