topic Does overtime income affect our return? We owe a lot this year even though my husband and I both claim 0 to have the most taxes withheld. About 28% of his income was OT. in After you file

Does overtime income affect our return? We owe a lot this year even though my husband and I both claim 0 to have the most taxes withheld. About 28% of his income was OT.

JusNeverMind — Thu, 04 Mar 2021 21:32:45 GMT

Married filing jointly - We have owed Federal and State (NY) the last couple of years. About 25-30% of my husband's total income is generally from over time. Is this the reason for owing? We both already claim 0 to have the most withheld and have one dependent.

Re: Does overtime income affect our return? We owe a lot this year even though my husband and I b...

ToddL99 — Sun, 07 Mar 2021 16:53:27 GMT

The most likely reasons you owe additional tax is that you are a two-income family and your husband works a lot of overtime.

(Without knowing what other income, deductions or credits you have, it would be impossible to give you a better answer).

Even if claiming "0" withholding exemptions, you may still owe additional tax. The amount withheld from each of your paychecks is based on the earnings of that paycheck alone; when you combine your incomes (especially with overtime), you can be in a much higher tax bracket than either paycheck's withholding would cover.

To avoid owing additional tax at return time, consider having your employer withhold an additional amount from one or both paychecks. Figure out how much extra you owed, divide that by the number of remaining pay periods 2021 and have the employer withhold that much extra for the rest of 2021.

Re: Does overtime income affect our return? We owe a lot this year even though my husband and I b...

JusNeverMind — Sun, 07 Mar 2021 18:50:53 GMT

His OT does not push us into the next tax bracket, which is why I was confused. His OT rate is already so heavily taxed. We have already started having extra withheld. Thanks!