Every year many taxpayers are surprised that they owe additional income taxes even though their employer withholds taxes. This is not as uncommon as you may think, and there are many reasons why it could happen.
Remember when you first started your job and your employer had you fill out a W-4 form? Well the more allowances you claimed on that form the less tax they will withhold from your paychecks. The less tax that is withheld during the year, the more likely you are to end up paying at tax time. But you can avoid this happening again by making changes to the form W-4. This article has further details: Why do I owe Federal taxes?
TurboTax has a great tax tool to estimate your taxes and even prepares a W-4 to provide to your employers: Taxcaster
You mentioned possibly married filing separately - typically this does not result in tax savings. Likely one of you is a bit under withheld. You can run the taxcaster as Married Filing Joint and again as Married Filing Separately to check on this. A couple may pay the IRS less by filing separately when both spouses work and earn about the same amount. This link has additional information: when-married-filing-separately-will-save-you-taxes
Have an amazing day. Evelyn M (CPA 20+ years)
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