My husband and I make approximately $150k between the two of us.
Last year we updated our W-4 to both be Married Filing Jointly with 0 exemptions with the understanding that this would take out the highest amount of taxes possible so that we didn’t underpay. We are married with no dependents and thought that this was the right thing to do. Unfortunately we were wrong and the opposite occurred. Now we have “underpayed” our taxes by a substantial amount. How can we fix this moving forward so that the correct amount of taxes are taken out? I understand in the long run it’s better to pay than to receive a refund but we would like to get closer to the correct amount of taxes paid so that we don’t have a giant surprise tax bill.
I just used the IRS website to determine the recommended additional amount to be taken out of each of our paychecks. Is this the best thing to do?
Change the W-4 for both of you to SINGLE instead of married ... that will have the most withheld. And if that will still not be enough then one or both of you can add a set amount on line 4C to come out per pay period ON TOP OF what is already being withheld.