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"How can I owe over 4x as much this year when nothing else has changed other then my income."
The US taxing system is "progressive", which means that as you earn more and more "ordinary income" - like wages - your tax rate can climb. You can see this in the attached picture that shows the tax brackets for married couples.
It's impossible to know, of course, but I'm guessing that your combined income has put a piece of your income into the 25% tax bracket.
You certainly can answer your own question by printing out both your 2015 and 2016 income tax returns and working through them - line by line - to see how the two years compare and really getting an understanding how the income tax system works.
(One BIG problem with the online version is you can't see your income tax Forms and Schedules until you actually pay. Too, more and more people really don't have a clue how our tax system works because they never take the time and effort to actually look at and understand their own income tax returns. Use of the computer to prepare income tax returns has reduced most people to simple data-entry monkeys who pound in numbers off little pieces of paper and then blink stupidly at the TurboTax "Refund-O-Meter". Don't be that couple.)
"Also, why do I keep owing?"
You say that like it's a bad thing, and it's not if you know that you're going to owe and you don't get yourself into an "underpaid" situation where you owe penalties for being "underpaid." (That's a piece of tax jargon that has a specific legal meaning). Most people who get a tax refund cackle over this "windfall", not understanding that all they've done is make a year-long interest-free loan to the IRS.
Of course one way to not owe is to simply earn less and keep your withholding at the same level. That would be a classic example of how taxes act as a disincentive to work, captured in Alan Greenspan's famous quote "Whatever you tax, you get less of." Another way, of course, is to increase your withholding. It sounds like your wife earns less than you do so having her claim "0" personal exemptions would probably put you over the hump.
"I will say we do work a lot of overtime but that's all taxed, isn't it?"
It is, of course, but the implicit assumption behind that statement is that income is taxed at a flat rate, but it's not.
Tom Young
"How can I owe over 4x as much this year when nothing else has changed other then my income."
The US taxing system is "progressive", which means that as you earn more and more "ordinary income" - like wages - your tax rate can climb. You can see this in the attached picture that shows the tax brackets for married couples.
It's impossible to know, of course, but I'm guessing that your combined income has put a piece of your income into the 25% tax bracket.
You certainly can answer your own question by printing out both your 2015 and 2016 income tax returns and working through them - line by line - to see how the two years compare and really getting an understanding how the income tax system works.
(One BIG problem with the online version is you can't see your income tax Forms and Schedules until you actually pay. Too, more and more people really don't have a clue how our tax system works because they never take the time and effort to actually look at and understand their own income tax returns. Use of the computer to prepare income tax returns has reduced most people to simple data-entry monkeys who pound in numbers off little pieces of paper and then blink stupidly at the TurboTax "Refund-O-Meter". Don't be that couple.)
"Also, why do I keep owing?"
You say that like it's a bad thing, and it's not if you know that you're going to owe and you don't get yourself into an "underpaid" situation where you owe penalties for being "underpaid." (That's a piece of tax jargon that has a specific legal meaning). Most people who get a tax refund cackle over this "windfall", not understanding that all they've done is make a year-long interest-free loan to the IRS.
Of course one way to not owe is to simply earn less and keep your withholding at the same level. That would be a classic example of how taxes act as a disincentive to work, captured in Alan Greenspan's famous quote "Whatever you tax, you get less of." Another way, of course, is to increase your withholding. It sounds like your wife earns less than you do so having her claim "0" personal exemptions would probably put you over the hump.
"I will say we do work a lot of overtime but that's all taxed, isn't it?"
It is, of course, but the implicit assumption behind that statement is that income is taxed at a flat rate, but it's not.
Tom Young
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