Modify W-4

[AA235]

My husband and I file jointly and owed taxes for the first time in many years. What sort of adjustments can we make to help ensure we don't owe taxes again this year?

[GabyC-EA]

Hi @AA235 ,

The new 2023 Form W4 does a great job at allowing you to adjust your withholdings.

• On form W4 Step 1, you and your spouse should both report as Married Filing Jointly.
• On Step 2 (b), if both of you work, then complete the worksheet in page 3 of the W4 form (link included  below). The worksheet Step 1 refers to the Table in page 4 for Married Filing Jointly  - use the first table to complete Steps 1-3 of the worksheet. 
• On Step 4 (c), you can enter any additional tax you want withheld each pay period. 

If you or your spouse are self employed, make your estimated quarterly payments. To calculate your estimated payment amount use the worksheet on page 6 Form 1040 ES (link included below)  to help you calculate the amount due each quarter. 

I also suggest you  can research if contributing  to your 401K at work  or IRA contributions can help you minimize your tax liability at the same time saving for retirement.

Below are some helpful articles:

Estimated Taxes: How to Determine What to Pay and When 

Employee’s Withholding Certificate 

W-4 Calculator 2023 

Boost Your Retirement Savings 

Thank you for reaching out and good luck! 

[andrea_cpa]

That is a great question!  Were there any new variables introduced into your finances last year to explain the reason why you may have owed more than usual (new job, second job, started a business, sale of investments, a child who has aged out of the child tax credit, to name a few)?  If so, is this change likely to continue into future years?  It is also a good idea to look at your W-2's from year-to-year to see if your withholding decreased dramatically from one year to the next.  

If you don't anticipate any new changes to your tax situation this year, you might want to look at increasing your withholding (if you are an employee) or making estimated quarterly payments (if you are a contractor).  You can adjust your withholding by filing an updated W-4 with your employer and perhaps selecting "Single" in Step 1, eliminating credits from the calculation in Step 3, or adding an additional withholding amount per paycheck on Line 4c. 

I recommend running your 2023 numbers through this calculator to help determine if you need to be withholding more this year. https://turbotax.intuit.com/tax-tools/calculators/w4/

I hope this is helpful!