I seem to owe taxes on my federal returns every year. This time, it's more than it has been in 5 years. My wife and I file jointly. I used the IRS withholding calculator and it is telling me that I need to take our more withholding from each paycheck but it says my wife needs to take out nothing more additionally. Would I be able to distribute the withholding amount between the two of us? So, if it tells me to withhold an additional $200, can she withhold $100 while I withhold the other half?
Yes, you can withhold an extra amount on whoever's check you want to. Did you try doing a dummy return to see if you make out better as Married Filing Separately? If you are having to pay more in this year than ever before, you may want to test both ways before filing to see if you pay less when filing separate. If your income is high enough or you do not have dependents, it is possible that it will help.
Married Filing Joint versus Separate
Thank you, Vanessa! No, I have not tried that yet but I will definitely try it today.
I don't have enough to pay the amount due right now so I was going to pay whatever I could and file an extension. I was then going to pay them periodically, when I have the funds, to keep the penalties down. Any idea how long I can continue to extend it? A friend suggested a home equity loan/line of credit to pay it immediately but I'm concerned the interest rate on that will be higher than the IRS penalties.
There are several issues here.
You are probably already accumulating interest and penalties
Any payment after April 15th is considered late.
Please contact us again with any additional questions or to provide some additional details.
Thank you! So, I just checked with my credit union and the rate they gave me was 9% for a fixed HELOC. So, unless I can find something better than the IRS rate penalty, I should just pay the IRS as quickly as possible before October 15th. Would I still tagged with a penalty if I pay the entire amount due before then?
Also, a friend of mine doesn't withhold anything extra - he just automatically places a set amount into a savings account for each paycheck and then uses that to pay the IRS with his filing every year. But, he would still be paying a penalty, correct? Since the IRS is going to penalize him for not paying them with each pay period?
Thanks, again!
@y2kdad365 IRS late payment penalties are 1/2% a month plus interest, file late and there is an additional 4.5% penalty for each month or fraction thereof late for up to 5 months..
you can go to IRS website to see about payment plan
https://www.irs.gov/payments/online-payment-agreement-application