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They didn't take out enough. And any increase in income can boost you into a higher tax bracket, and/or lower some deductions/credits.
They didn't take out enough. And any increase in income can boost you into a higher tax bracket, and/or lower some deductions/credits.
The one time payment put more of your income into a higher tax bracket most likely. If your employer withheld 20%, but that income was being taxed at a 24% or 32% rate, then you are at a deficit. You could also have some credits phased out with a higher income.
Also, the W-4 withholding amounts were revised a year ago because of lower taxes resulting from tax reform. If you were close to owing money in the past, you may want to lower your exemptions on your W-4. In my opinion, there was a bit of an overcorrection to the withholding amounts.
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