My husband and I both had 1 withholding through our payrolls for 2017. Our combined taxable income is 81,000. How is it that we owe $1500 federal and $450 state tax?

[Opus 17 · Accepted solution]

Because each W-2 was giving you credit for the standard deduction plus 1 allowance, but you are only allowed one standard deduction overall.

Spouses with 2 jobs need to fill out the 2-job worksheet.  You get a number of allowances that you divide between you.

For 2018, reducing one of your allowances by 1 should allow you to come close to breaking even.  Reducing them both would give you a refund (at the cost of having more money taken out of your checks).

This web site has the IRS withholding calculator.  Although it is not available now due to being reprogrammed for the tax law changes, when it comes back it is very accurate, assuming you provide the level of detailed input it asks for.  It will give you an estimated refund or tax due amount and advise you on how to change your allowances.  https://www.irs.gov/individuals/irs-withholding-calculator