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I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

How can I owe over 4x as much this year when nothing else has changed other then my income. We got another 30k in income (all from our current jobs, we just got raises) and I took an additional $10 out a week (total $520) but now I owe 1,300? We paid roughly the same in our student loans and mortgage so none of our deductions changed.

Can anyone explain this to me please...

Also, why do I keep owing? My wife and I both claim 1 deduction only. I will say we do work a lot of overtime but that's all taxed, isn't it? We both have 1 Job.
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I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

"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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5 Replies

I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

"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





I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

If my wife and I both claim 0 this should stop this from happening the future, correct. Also, I think one mess up is that I have my state taxes still listed as SINGLE but my federal listed as MARRIED on my weekly paychecks. I think I forgot to change my state status to married. Does this hurt or help me? By that I mean, does this mean more or less taxes are being removed?

Also, I understand we entered a new tax bracket but shouldn't both of us claiming 1 and taking an additional 500$ a year our for taxes cover that? Shouldn't we still be around where we should be.

I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

"If my wife and I both claim 0 this should stop this from happening the future, correct. "

That may be overkill, resulting in a big refund (AKA "interest free loan.)  Given your combined income owing $1,300 when you file your income tax return is peanuts, though I understand that nobody likes writing a check.  I suggested only having your wife claim 0 but another, more precise approach, is to do what you did previously and simply ask that an additional $X amount be withheld.

"I think I forgot to change my state status to married. Does this hurt or help me? By that I mean, does this mean more or less taxes are being removed?"  

I think most states that issue their own version of the federal W-4, (I think about half the states simply use the federal W-4), pretty much copy the W-4 and put their state's name on it.  So you really don't fill out their "W-4's" and state "single" you enter "allowances", just like the federal W-4.  So I'd expect your state's version of the W-4 would look like your federal W-4, with an allowance of "1".  The higher the number of allowances the less withholding.

"Also, I understand we entered a new tax bracket but shouldn't both of us claiming 1 and taking an additional 500$ a year our for taxes cover that? Shouldn't we still be around where we should be."

Well, clearly the additional amount didn't "cover that" if by "cover that" you mean "we should have owed $300 this year, too" or "shouldn't we be getting a refund?"  I can't see your income taxes but my GUESS is that "bracket creep" alone probably added something like $1,000 to your taxes and you only withheld an additional $500.

From my standpoint you ARE right around where you should be.  You haven't made an interest free loan to the government and the amount of taxes you owe certainly should be manageable given your combined income, if you are being prudent.

I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

Is there a huge difference in claiming 0 and 1 from a weekly standpoint? Will I see a significant change in my weekly take-home?

If the weekly difference is miniscule I rather just claim 0 on both of us and not have to worry anymore.

In regards to the manageable amount. I can pay the 1,300 but it does put me in a tough spot. We make a lot but we owe a lot for our student loans/cars/ect. Rather just not owe a large amount at once, I rather pay it a little at a time (weekly from my check). My wife and I don't keep a large balance in our bank and luckily have no credit card debt. We use all our extra income to pay extra on student loans/cars/house. If we keep up our current rate of 2.5k a month extra on our bills, we will be debt free in 3 more years. Everytime we pay something off we add that payment to our growing extra payment and so forth. It's a good strategy and we've been doing it for the last 2 years. It's going to feel great in 3 years when we have no monthly payments except for out phone, utilities and mortgage (house isn't included in our debt free plan).

I went from 70,000 income last year (wife & I combines) to roughly 100,000 this year. I owed $300 last year so I increased my taxes by $10 a week and now owe ~1,300 why?

Go over and work through the federal withholding calculator with as much precision as you can muster.  It will recommend allowances and suggested "extra" amounts to get your withholding and your tax liability to zero out.
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