W4 Witholding

[taxprepny99]

Hello,

I am in the process of completing all of my tax information for 2023 (1099-INT, 1098, W-2). I filed married filing separately for the past two years with a "0" on W4 and in years 2021 and 2022 I have overpaid and received a federal tax refund of $750. For this year's taxes, after entering all of the information, it says that I owe $1,100 of federal taxes. My salary went from 94k in 2022 to base salary of 99k + investment income of 8k = 107k in 2023. I have always itemized my deductions. My spouse's base salary has been around $115k. Any reason why I have to payback $1,100? I'm wondering if maybe my employer hasn't taken enough taxes out or I'm not specifying the right amount of witholdings? I've used the witholdings calculator but am looking for proper guidance. Much appreciated! 

[xmasbaby0]

More income = more tax

You might want to adjust the W-4 you give to your employer

https://www.irs.gov/individuals/tax-withholding-estimator

https://www.irs.gov/pub/irs-pdf/fw4.pdf

You also might want to re-consider filing separate returns.  That is usually the worst way to file.

If you were legally married at the end of 2023 your filing choices are married filing jointly or married filing separately.

Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will get the married filing jointly standard deduction of $27,700 (+$1500 for each spouse 65 or older)  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return.

 Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable. Your limit for SALT (state and local taxes and sales tax) will be only $5000 per spouse. In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income. ( Community property states:  AZ, CA, ID, LA, NV, NM, TX, WA, WI)

 If  you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice since with online, you get one return per fee.

https://ttlc.intuit.com/questions/1894449-married-filing-jointly-vs-married-filing-separately

https://ttlc.intuit.com/questions/1901162-married-filing-separately-in-community-property-states

https://ttlc.intuit.com/questions/1894449-is-it-better-for-a-married-couple-to-file-jointly-or-separ...

[taxprepny99]

Thank you @xmasbaby0 for your honest and detailed feedback with shared resources! I appreciate it and will consider changing filing jointly. Last tax year, we looked at the difference and when we compared we realized that we would be owing more when filing jointly than filing separately.