I have to enter two W-2 forms (for two different jobs) on my 2019 tax return. The wages on one is $29,540 (taxes withheld are $2,920 = 10%) and on the other wages are $5,584 (taxes withheld are $490 = 9%). Why is that when I enter the W-2 for $5,584, my tax return is reduced by around $900?
Thanks!
Because we have a progressive tax system. The more total income you make you pay a higher percent for tax.
That's common. It just looks that way because you put them in as separate W2s and saw the tax due change in between them. If it all was on one W2 you would get the same answer. And each job was withholding like it was your only job.
Because you only get one standard deduction no matter how many W2s you put in. Turbo Tax starts out by giving you the Standard Deduction. You entered more income when you entered the second W2 but you didn't enter more deductions. And each job only withheld taxes like it was your only job for the year. You might want to adjust your withholding. Also as you add more income you might not be getting as many credits as before like the EIC credit. And it was probably giving you the EIC credit until you went over.
By the way, you didn't have .10% for withholding. You had 10%. You don't need the decimal point with the percent sign. .10% would be less than 1%.
Thank you for such a quick reply! This information helps a lot!