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Do multiple w2 put you in a higher tax bracket even though they don't add up to much?

 
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3 Replies

Do multiple w2 put you in a higher tax bracket even though they don't add up to much?

It's not the number of W2's but the amount of income and filing status that determines your tax bracket.

Single filers

Tax rate

Taxable income bracket

Tax owed

10%

$0 to $9,950

10% of taxable income

12%

$9,951 to $40,525

$995 plus 12% of the amount over $9,950

22%

$40,526 to $86,375

$4,664 plus 22% of the amount over $40,525

24%

$86,376 to $164,925

$14,751 plus 24% of the amount over $86,375

32%

$164,926 to $209,425

$33,603 plus 32% of the amount over $164,925

35%

$209,426 to $523,600

$47,843 plus 35% of the amount over $209,425

37%

$523,601 or more

$157,804.25 plus 37% of the amount over $523,600

Do multiple w2 put you in a higher tax bracket even though they don't add up to much?

Usually they do.  More income = more tax.  Yes that is common. It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it was all on one W2 you would get the same result. And each job was withholding like it was your only job.

 

Because you only get one standard deduction no matter how many W2s you enter. Turbo Tax starts out by giving you the Standard Deduction. You entered more income when you entered the second W2 but you didn’t enter more deductions. And each job only withheld taxes like it was our only job for the year. You might want to adjust your withholding. Also as you add more income you might not be getting as many credits as before like the EIC credit.

AamilD
Expert Alumni

Do multiple w2 put you in a higher tax bracket even though they don't add up to much?

It depends. Since I am not sure what filing status you will be filing under, my assumption is that you will be filing as a single filer.

 

The first $12,550 income is not taxed since its part of the standard deduction so if you make below $12,550, in most ( not all ) cases, you should not be paying any taxes.

 

If you make above that threshold, there is a concept of tax brackets and marginal tax rate. Let me give you an example. Lets say your total income for 2021 was $50,000. Your tax will be calculated as follow:

 

Total Income                                                           =$50,000

Less Standard Deduction                                       =(12,550)

                                                                          _____________

Taxable Income                                                      $37,450

 

 

Now based on the tax brackets, your first $9,950 of Taxable income will be taxed at 10% and the remaining $27,500 ($37450-$9,950) will be taxed at 12%.

 

Based on the above example you can see that as you start making more income, the ADDITIONAL income will be taxed at a higher rate. 

 

However, just because you have multiple W2 does not automatically put you in a higher tax bracket. It all depends on the total income. Please refer to the image below for the 2021 Tax Brackets as a reference:

 

 

 

 

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