IRS withholding calculator says we're holding back more than enough, but we appear to owe $4000 in federal taxes, but getting $2000 back from State. What's going on?

[LeticiaF1]

Go through the TurboTax withholding calculator.   If you owe money is because you did not pay pay enough tax.  After you go through the calculator, you should review your W4 Form with your employer so that your information is updated for 2024.  Your W4 information for the state is usually the same as your federal. 

[Rags19]

I understand that and I have checked my information with my employer. The witholding calculator says I'm holding back more than enough yet it also appears that I owe Federal taxes, so I'm trying to figure out why that may occur?

[JohnB5677]

I think you mean that the IRS calculation is on the W-4 that you gave to your employer.

If you've prepared a W-4 and still owe substantial taxes, you may have misunderstood how to post the form.

If you have multiple incomes, your taxes will go up rapidly.

Taxes start at 10% and go up to 37%.  I'll show fewer tax brackets for simplicity.

For Married Filing Jointly

$0 to $22,000 - 10%

$22,001 to $89,450 - 12%

$89,451 to $190,751 - 22%.22

If your married and both of you work.

You both have taxable income of $50,000.

You get taxed at 10% for $22,000 = $ 2,200

And at 12% for the next $30,000 =  $3,600

Your spouse is taxed 12% in $37,450 = $4,497  (the balance in the 12% bracket

Finally she will pay 22% on the last $12,550 = $2,761

For a total tax of $13,048

The W-4 has to show how the income accumulates, and must be complected for all sources of income.

[jkandee2]

on the IRS website to help fill out a W-4 for your employer. The IRS has a W-4 income calculator to figure out how much you should withhold so you won’t owe taxes at the end of the year. According to the calculator I’m overpaying by $12000 but when we do our taxes, we owe $10,000. That’s what the other person’s question is why is it so off

[DaveF1006]

The IRS Tax Withholding Estimator is a useful tool, but its accuracy depends on the information you provide. Several factors may cause discrepancies between the estimator's results and your actual tax situation:

1. Incomplete or Inaccurate Information: If the information entered into the estimator is incomplete or inaccurate, the results may not reflect your true tax liability.
2. Changes in Income or Deductions: Significant changes in income, deductions, or credits throughout the year can affect your tax liability. The estimator may not account for these changes if they occur after you use the tool.
3. Complex Tax Situations: The estimator may not handle complex tax situations well, such as multiple sources of income, self-employment income, or significant investment income.
4. Withholding Adjustments: If you or your spouse have adjusted your withholding mid-year, it can affect the overall accuracy of the estimator.

Here some information that may be of benefit to you regarding the IRS Tax Estimator.