Ve entered a second W2 and refund dropped by $200 from $1200 to $1000even though I didn't move in tax brackets . 1st wss $31000...2nd was $1200. Totaling 32400. Why?

[Coleen3 · Accepted solution]

There are three main reasons that could happen. The first is that the more income you have, the higher the tax bracket you may find yourself in. The higher the bracket, the bigger percentage of your income is taxed. Even if you did not jump into a new bracket, the entire amount of the second W-2 is being taxed at the higher rate instead of incrementally like the first. Here are the brackets for 2016:

http://taxfoundation.org/article/2016-tax-brackets

 The second is withholding, the amount your request your employer to withhold on your W-4. There are three choices you can make on line 3: Single, Married or Married but withhold at a higher Single Rate. If you choice the first or third option, they will withhold more than if you choose Married.

 On line 5, you tell how many allowances you with to claim. If you choose zero, they will withhold the most based on the tables (see Pub 15 link below). The more allowances, the smaller the refund, BUT, you will get a little more in each paycheck. In that way, you can choose if you prefer to have more money in your paycheck or at the end of the year in your refund. If you have a second job that is part time or makes little per week, the table will not direct the employer to withhold amounts based on your entire income.

Please see the links below for more information. The first is a copy of Form W-4. The second shows the withholding tables for 2016, starting in Section 17, Wage Bracket Method.

• The third is that your increased income may have decreased any income-based credits you were receiving.

https://www.irs.gov/uac/about-form-w4 

www.irs.gov/publications/p15/ar02.html

[noam156]

I understand all the fundamentals which you've related to. Thank you.
I still don't understand how an extra $1200, that did  not elevate me into a new bracket,  were taxed so heavily?
Both employer's  W4's were filled exactly the same as I always do. Single. 2 allowances total on line 5.

[Coleen3]

If you are single, why are you claiming two allowances? You are paying 15% tax (give or take) on the additional w-2.

[noam156]

How many allowances should I claim then on line 5?
Doesn't it all even out eventually on the refund side  of things? It's  just withholding at paycheck time vs end of year.
So regardless how little, you get "penalized" for having a second W2??? 15%???
Shouldn't it be accumulative within the bracket?

[Coleen3]

You are paying tax based on your tax rate. If you had done it all at once, your original refund would have been $200 less. You can leave it at "2" if you are comfortable there.

[noam156]

I'm confused. I filed both W2s all at once yesterday.

[Coleen3]

I see, I thought you did an amendment for the second. The same principal applies though. You can't take one income as a separate unit.

[noam156]

My thought exactly. It should be taxed together as 32k not 31k plus 1k separately. Yet you say it was taxed separately at 15% . Confused.

[Coleen3]

Sorry, I just assumed it was an amendment with the mention of a second separate w2.

[noam156]

So why was I taxed at 15% separately and my refund dropped ?
I know about tax rate, but that shouldn't  be a deciding factor come tax return filing. It should all be dependent on brackets, which I haven't surpassed by going from 31k to 32k for the total 2016 tax season . Obviously people have 2,3,4 W2s at times.