We have a somewhat "interesting situation".
My wife and I both have regular jobs.
We also have two residential income properties.
...and we each have a sole proprietor side business (mine is an LLC commercial rental property).
I also have a self managed investment account that pays dividends and interest.
Up until 2019, we simply had extra withholding taken out of our pay checks, and that covered the additional income. We were usually under $200 either owed or refunded.
In 2020, IRS unexpectedly reduced the withholding from my wife's check.
We ended up owing $1200 for that tax year.
She and I both filled out new W4 forms and asked for additional withholding.
But again, not only did IRS not honor the request, they again reduced my wife's withholding.
For the 2021 tax year we are looking at owing $2300.
Why?
Why won't IRS allow us to withhold enough to cover what we owe during the year.
It's MUCH easier to simply have it taken out every month than to remember to write checks and mail estimated quarterly payments.
The "new" W4 instructions basically say to take ALL withholding from the highest paycheck.
Why? Why do they care?
I only make about 10K more than my wife, but we each manage our own side businesses.
Why wouldn't IRS want their money every month?
If this sounds like a rant, I'm sorry. I just can't figure this out.
I WANT to pay my taxes, and I don't want to owe thousands every April 15th.
I'm hoping an experienced professional here can shed some light.
