We underpaid a lot this year for the first time

[jdog76]

Hi.

My wife has a base salary and also gets bonuses later in the year. This was the first year she received bonuses as she just started 1.5 years ago. I also started my own business this year and had a small loss.

This is the first year we had to pay more in federal taxes. We were off by quite a bit too. We claimed 6 exemptions this year on my wife's w4. If we had claimed 0 would that have given us a return or put us closer to breaking even.

I guess my question is, if my wife's employer is withholding taxes how the heck did we get so far off? Was it our fault for sampling flaming way too many allowances? 

Thanks

[Phillip1 · Accepted solution]

There a couple of options.

• You could utilize the W-4 calculator in TurboTax and likely reduce your allowances. This should help avoid the problem next year.
• You can make estimated payments to the IRS. Further, there is an option that is easy, online, and you can make the payments every pay-date. The IRS has a new system called directpay.irs.gov you can make a portion of the quarterly estimated payments from TurboTax each payday. Take the estimated payment amount and divide it by the number of paydays each quarter (3 months. For example a 2,500 dollar quarterly payment would be 833 dollars a month.) I use this personally. It is an easy way to control my tax payments, you can make sure you have paid enough to avoid the estimated tax penalty next year.

[jdog76]

Thank you. I spent several hours with the W-4 Calculator today and I think I left more confused than I was before. A lot of my wife's income is through bonuses so that made the calculator difficult. I did it without bonuses and by averaging them into her monthly paychecks. Both times said we would get a little bit back instead of owing a ton. We knocked our allowances down to 2 and I suppose we could just as easily tack on an additional amount each paycheck as well.  

Could the huge amount we owe be solely due to us having too many allowances (6) on our W4?