Last year, my spouse and I ended up with a surprise tax bill of about $17,000, despite being W-2 employees with what we thought were sufficient withholdings. We’re trying to avoid that kind of shock again and would really appreciate help understanding how to correctly fill out our W-4s — and, just as importantly, what might have caused such a large underpayment in the first place.
Here’s our situation:
I earn around $210K annually, including a bonus that makes up about 20% of my income.
My spouse earns about $110K.
We have one dependent.
We also have a rental property that generated roughly $15K in net profit last year.
We file jointly and claim zero deductions on our W-4s (we just take the standard deduction when we file).
The only major change in the tax year was that we bought a house.
We’ve owed taxes in past years — sometimes a few thousand — but never anything close to this.
We’re hoping to understand:
What might have triggered such a large tax bill last year?
Should we both be checking the “multiple jobs or spouse works” box on our W-4s?
Should we use the extra withholding line on the W-4, or would estimated payments be better, particularly for the rental income?
Are there common oversights or strategies for households like ours to ensure proper withholding?
Thanks in advance — any help is much appreciated. We’re trying to be proactive this time around.
