My Wife and I Claim One Allowance Each; Why Do We Still Owe Money?

Forum|Forum|6 years ago
January 28, 2020
13 replies
120 views

My wife and I file as married, filing jointly. We claim one allowance each and we each make $39k. Why on earth do we owe over $400 after filing our 2019 return? We have no other income and the only additional form we have is regarding $540 of student loan interest paid in 2019.

Why are we not seeing the appropriate amount of money withheld from our paychecks?

We got married in 2018 and saw a significant drop in our refund the next year. We'd both been used to getting refunds of over $1k when we were single but that first refund was less than $750. We don't understand why things have changed so much now that we're married and why it's so much worse in this second year. Everything our families told us before getting married was that we'd see even better refunds.

None of this makes sense and we cannot afford this.

Best answer by ReginaM

As part of the Tax Cuts and Jobs Act, the IRS and Treasury adjusted the tax withholding tables, which affects the amount of income taxes withheld from your pay. You may want to check with your employer to adjust your withholdings from your paycheck.

ReginaMAnswer

Alumni - Intuit

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whiteywhackersAuthor

Level 2

Thanks, Regina. Is that different from our allowances? The page on my company website where you can modify your W-4 is described as tax withholding. From viewing the form below, would you expect different language regarding withholding vs. allowances? Should I be looking for something else?

Jack Melcher

Level 2

Your refund or underpayment is not relevant, since it is a function of how much you have deducted from you paycheck. You need to look at the total federal tax paid for the year and then compare it to the previous year. You should also look at the percentage of you adjusted gross income was paid in federal taxes and also compare that to the previous year.

ColeenD3

Alumni - Intuit

If you want more money in your refund as opposed to in your paycheck, one or both of you should claim zero allowances.

whiteywhackersAuthor

Level 2

Thanks, Coleen. I've seen other posts where married couples have claimed zero allowances and still owed money. They were told that they needed to file new W-4s marked as "withhold at a higher single rate," because not doing so indicates you're the only person in the household making money, therefore having less money taken from each paycheck resulting in underpayment. I've also seen it said that withholding at a higher single rate is beneficial when spouses are making similar incomes. Is either of these statements correct?

Why would the difference in zero allowances and one allowance be so great as to (theoretically) result in us getting a refund or owing hundreds of dollars?