2023 1040 taxes

[tunapiano1]

So I'm having a difficult time understanding my taxes for this upcoming tax season and could really use some help. 

I 2023 I will make an estimated 105,000. We will file married filing jointly and have 4 children, all 4 qualify for the child tax credit. Now in every 2023-2024 tax calculator I use they all say either I will slightly owe the irs say 200$ or my refund will be about 200$.

What I don't understand is how I if I am in the 12% tax bracket after the standard deduction of 27,700 will my refund be so small? According to the tax bracket my estimated taxes owed would be about 11-12,000. With a standard deduction how is that sml refund or tax bill coming about? 

I am by no means a tax expert. I have trouble with this most years but doesn't my estimated taxes owed have to amount to more than the standard deduction of 27,700 before I'd owe anything to the irs? 

From what I can understand my 8,000$ in child tax credits is being wiped out by something I'm not seeing.

Also I don't pay any federal taxes throughout the year per the irs w4 estimation tool which says a family of 6 with 4 dependents shouldn't owe taxes. 

Am I owing a huge tax bill that's wiping out the child tax credits? Or are the tax calculators just not showing a refund including the child tax credits?

[NCperson · Accepted solution]

@tunapiano1 here is how it works: 

AGI = $105,000 less standard deduction of $27,700 leaves taxable income of $77,300

the tax on $77,300 is $8,839

with 4 children under the age of 17, there is $8000 of tax credits. 

the tax due would be $839. 

If you are in the 12% tax bracket, that does not mean ALL your income is taxes at 12%.  Only the 'taxable' income is taxed (so the part after the standard deduction) and then the first $22,000 is taxed at 10% and then the rest is taxed at 12%. 

for the W-4, STEP 1 should reflect "married filing Joint" and STEP 3 should list 4 children / $8000.    I suspect your 'income after pre-tax deductions' is really less than $105,000.  are you subtracting contributions to 401ks, medical premiums, dependent care / FSA, or HSAs from that number?  That will change the equation.  Many forget to subtract their 'pre-tax deductions' when thinking about how much they earn. 

If your 'income after pre-tax deductions' is less than $98,000, I would not expect there to be any withholdings.  The tax on $98,000 is $7,999 and the tax credit of $8,000 would negate that.  

[tunapiano1]

Thanks for the reply. That's the best answer I've ever gotten for this. I've been googling it for years and trying to find an answer. Looks like I should've been taking out the taxes all year and just changed my w4. Thank you. 

[NCperson]

@tunapiano1 do go back and reconfirm your income.  The w-4 mimics the tax return.  So if nothing is being withheld from your paycheck for federal taxes, I suspect your income is really less than $105,000. 

Again, even if you are making $105,000 and you have medical premiums, 401k contributions, etc. coming out of your paycheck on a "pre-tax basis", then what you are going to report on your tax return is the net of those numbers - so a lot less than $105,000.  Look at your paystub as they normally indicate how much of your earnings are taxable.