I claim two dependents and file married filing separately. I have only had 5 dollars of federal tax taken out. I’m a little confused about why I’m not being taxed.

[NCperson]

@brittmorrow13   - the payroll systems mimic the tax return.  So if you stated on the W-4 that you are filing MFS and have 2 children under the age of 17, the payroll systems are smart enough to realize you are eligible for tax credits (earned income and child tax credit).  The whole idea is to deliver those credits over the course of the year rather than getting a large refund in April.  

if you post your expected income for the year, I can explain the math, 

ps - why would you file MFS and not HOH?  

[xmasbaby0]

The W-4 you gave to your employer does not dictate how you will have to file your tax return.   When it is time to file your return you can file a joint return, married filing separately or perhaps as Head of Household, depending on your circumstances.  You should be mindful, however, of how you actually intend to file, because your standard deduction and your child-related credits are affected by the filing status you use when you prepare your tax return.

One thing needs to be mentioned--if you are really filing MFS you will not be eligible for earned income credit.   If you are eligible to file as HOH because you live apart from your spouse and have the children then you may be able to get earned income credit.   Filing MFS disqualifies you for EIC.   You can get the child tax credit if you are filing HOH or MFS if the kids are under the age of 17.

If you are married and live with your spouse then filing a joint return is almost always best when you have children, because you lose child-related credits if you file MFS.  You lose EIC and the childcare credit, and/or you lose education credit if you have a college student.

Am I Head of Household?

https://ttlc.intuit.com/questions/1894553-do-i-qualify-for-head-of-household

https://ttlc.intuit.com/questions/2900097-what-is-a-qualifying-person-for-head-of-household

If you qualify as Head of Household, when you enter your marital status (single or married filing separately) into MyInfo, and then enter your qualifying dependent, TurboTax will offer HOH as your filing status.

If you were legally married at the end of 2023 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $27,700 (+$1500 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return.

 Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice since with online, you get one return per fee.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

[brittmorrow13]

I’m a server so my pay really varies! I would assume I’m projected to make around 38000! Thank you for the advice I will file head of household!

[NCperson]

@brittmorrow13 - here is why the withholdings are so low.  This is what your tax return would look like: 

Income: $38,000

less: standard deduction: $21,900 (filing HOH)

taxable Income: $16,100

tax: $1613

less: Child Tax Credit (assumes both children are under 17 years old) = $4000

less: Earned income tax credit: $3731

refund: $6,118  PLUS whatever is withheld on your paycheck.

so even if there are no withholdings, you still get a refund.  So the IRS says there is no reason to withhold.  

Suggest changing your W-4 so that you check HOH in step 1 and $4000 / 2 children under 17 in step 3.  That will prevent any withholdings from occurring, which is correct for this situation. 

[NCperson]

and a clarification: 

<<If you were legally married at the end of 2023 your filing choices are married filing jointly or married filing separately.>>

However, even if you are legally married and you and your spouse lived apart during the last six months of the tax year, you would be able to file HOH if all the following conditions are met: 

1) you are filing a separate tax return from your spouse

2) you paid more than half the cost of maintaining your household

3) your home is the main home of your child / step-child / foster child for more than half the year. 

4) you claim the child as a dependent.