W-2 Entry and Refund Amount

[cjprice]

When only one W-2 is entered (either my wife's OR mine), TurboTax estimates a refund of about $1000 (but slightly different values for each).  However, when both are entered at the same time, it estimates over $9000 due.  How is this possible??

I entered my W-2 and TurboTax was estimating a refund of around $1000.  I entered my wife's W-2 and it changed to us owing over $9000.  I double checked that I entered everything correctly.  I also removed my W-2, leaving only hers and it again showed a refund of around $1000 (but not the exact same amount).  If the data from each individual W-2 shows a refund, how can they combine to have a tax due?

[rjs]

The data on a W-2 doesn't show a refund. Your refund or tax due is based on the total income on the tax return for the year, for both of you, and your total withholding, deductions, and credits. When you enter one W-2, your total standard deduction and any other deductions and credits are applied to the income from that first W-2. When you enter the second W-2, you don't get any additional deductions or credits. The full amount of income on the second W-2 is all additional taxable income. (You do get credit for the tax withheld on the second W-2.) So your total tax increases by the tax on the full amount of the second W-2.

[MayaD · Accepted solution]

Your refund went down/ amount due increased after entering the second W-2 because we start you off with the full standard deduction, which we subtract from the income you’ve entered so far.

You don’t get this deduction with each W-2 you enter, just the first one. This means your second W-2 will appear to be taxed more, but what’s really happening is that you’re getting a more accurate picture of your income.

For more information please check: Why did my refund drop when I entered a second W-2?