2 W2 Jobs - Owed Last Year

[158493]

Hello! 

Last year, 2023, I started a second W2 job in August. I kept my first W2 job. I claim 0 on both so I have the max taken out. But I still owed 3K in federal taxes, for the first time ever. I have no other unusual tax situations (don't own property, foreign anything, none of the other special circumstances). I had some donations, and a health plan with both companies that's about it. What can I do this year so I don't owe yet again?

[KNDavis]

Hi 158493!

When  person has more than one job, it's not unusual for them to owe taxes when they file.  I'm sorry you owed tax when you filed this year. 

In order to avoid owing tax next year, you'll want to update your W-4 at one or both jobs. 

• Option 1 is to check the box on Form W-4, Step 2 for both jobs, which adjusts the standard deduction and tax brackets by half, resulting in more taxes being taken out.  (This works best if both jobs have similar income or the lower paying job is at least half of the higher paying job.)
• Option 2 is to revise the W-4 for the higher paying job and complete the Multiple Jobs Worksheet, which will have more taxes taken out of the higher paying job.  You'll enter the additional tax amount on Step 4(c).

If you make changes to your withholding using one of the two options above, you should see more taxes withheld from your paychecks, and hopefully, a refund come tax time next year.

Sincerely,

Kimberly, CPA for over 30 years

@158493 

[158493]

I don't want either job to know about the other so would they somehow be notified? Or could I just say it's self employment of like a side job I'm doing myself (even though it's actually another w2 job) Or could I just use step 4 C and just kind of spread out what I owed over the 12 months as extra withholding?

[VolvoGirl]

Your job won't know about the other job or if you have self employment income.  You can change the W4 at work to increase  your withholding.  Or you can send in extra quarterly estimated payments to cover the difference.  

You must make quarterly estimated tax payments for the current tax year if both of the following apply:

- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:

90% of the tax to be shown on your current year’s tax return, or

100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

The four 1040ES quarterly estimates are due
April 15, 2024
June 17, 2024
Sept 16, 2024
Jan 15, 2025
Your state will also have their own estimate forms.

How to make the Estimated payments
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

Here are the blank Estimates and instructions…..
https://www.irs.gov/pub/irs-pdf/f1040es.pdf

Or you can pay on the IRS website. Be sure to pick 2024 1040ES payment
https://www.irs.gov/payments