Why do i keep owing taxes?

[vdubbin21]

My wife and I keep owing a ridiculous amount in taxes. Last year it was $1500 this year its $2500. We each have 1 job and make $65k each. Married filing jointly. No dependents, children, other forms of income, ect. Super basic. Standard deduction. We both filled out a new W4 last year and checked box C stating we both work and make similar pay. How in the world are we owing $2500 in underpaid taxes? I thought the new w4 was supposed to more accurately account for withholdings? 

[bluedeb · Accepted solution]

Are both of you claiming allowances on your W4?  If you are, you might want to put 0 allowances on the person who is making the less income.  That would have more taxes out of your weekly paycheck, that should help you not owe at tax time.

https://www.nerdwallet.com/article/taxes/how-to-fill-out-form-w4-guide

[vdubbin21]

We are both claiming zero and make almost identical income. Within a couple hundred bucks.

[bluedeb · Accepted solution]

Then you might want to have more taxes taken out of one of your checks.  You can also have one of you claim single on your W4, that would have more taxes taken out & then hopefully, you would not owe.  What filing status you claim on your W4 has nothing to do with what filing status you claim on your tax return.  The W4 is only designed to decide how much taxes you want out of your paychecks.

[vdubbin21]

Thank you for your response. While I understand that I can elect to have more withheld and/or claim something different on the w4, I guess the question is, why claiming zero and selecting box C for similar income is so far off from what needs to be withheld for federal taxes? It doesn't make sense to me. While our income has slowly increased over the years, we went from a refund of $2000 in 2017, to owing $140 in 2018, owing $1500 in 2019 and now $2500 for 2020.

[bluedeb · Accepted solution]

Unfortunately, even a little more income can put you in a higher tax bracket.  

You should generally increase your withholding if:

• you hold more than one job at a time or you and your spouse both have jobs (Step 2) or
• you have income from sources other than jobs or self-employment that is not subject to withholding (Step 4(a)).

If you do not make adjustments to your withholding for these situations, you will very likely owe additional tax when filing your tax return, and you may owe penalties. For income from sources other than jobs, you can pay estimated tax instead of having extra withholding.