Question

Tax Withholdings - confused

Forum|Forum|5 years ago
April 3, 2021
1 reply
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Hi all. Working my taxes and it looks like I'll owe nearly 11K Federal and I'm confused. For all of 2020 I was set up as a Single 0. I earn a salary, bonus and get some RSUs - taxes are withheld from all three forms of income. Small amounts of other income in interest and dividends, but not material. I have a few deductions like mortgage interest and charitable giving, but nothing crazy. What do I not understand about withholdings? At a Single 0, which reflects my actual status - single and no dependents, why am I not in closer balance with my obligations? Thanks for any insight.

S

SweetieJean

Employee

Each of your withholdings presumes the individual income item (wages, bonus, RSU) was your sole income. But when you add them all up, you are likely boosted into a higher tax bracket. This can also happen, for example, with married couples who both work, or folks who have more than one job. And it often catches folks by surprise at tax time, as it did you

When I was working, my spouse and I both opted on our W-4's for Single (even though married) with 0 exemptions, plus an additional dollar amount withheld. And we still owed money at tax time.