Take the 2-minute tour ×
Personal Finance & Money Stack Exchange is a question and answer site for people who want to be financially literate. It's 100% free, no registration required.

Wife and I have been married for almost 2 years. We filled jointly last year and W4 was at Married but withholding at single rate... we had 0 allowances. We got $1500 back last year and so we decided to change to 1 allowance each this time on our W-4. We got our YTD from our Dec pay check and I plugged in the numbers into the Turbo Tax TaxCaster http://turbotax.intuit.com/tax-tools/calculators/taxcaster/ and it says we will owe $2500?!?

Is this accurate and will it be different than when we get our W-2? I did not factor in student loan interest at all but that was $1000 for her and $1300 for me on interest. So I dont think that would make that much of a difference.

Why would we owe so much if we got $1500 back one year to estimated owing $2500 the next year? I dont think we went up in tax bracket.. if we did go from 25% to 28% would that make the difference? We are saving for a house to buy in the near future and this would really suck if we had to pay $2500.

Please, any input would help.

share|improve this question

closed as too broad by JoeTaxpayer, Dheer, C. Ross Jan 4 at 2:48

There are either too many possible answers, or good answers would be too long for this format. Please add details to narrow the answer set or to isolate an issue that can be answered in a few paragraphs.If this question can be reworded to fit the rules in the help center, please edit the question.

    
Don't the 2300 of the student loan cover almost all the difference? That seems to me to be the answer to your question. $200 more or less because of the allowances is not unheard of. –  littleadv Jan 16 '12 at 19:54
2  
An allowance in 2011 was $3700, so you basically told them to "not tax $7400", in the 25% bracket, this would have reduced your withholding $1850. Or you should owe about $350 instead of getting a refund. There is something you are either not sharing, or forgot to put into the software. –  JoeTaxpayer Jan 17 '12 at 0:35
    
I would wait until you get your actual W-2's before panicking too much. Once you get your actual taxes figured if you still do not understand then try to take them to a tax advisor for your specific circumstances. My guess is you will be able to tell if you put the numbers side by side. –  user4127 Jan 17 '12 at 18:55
    
Everything has been resolved. Not sure what happened, but when I used Turbo Tax 2011 the numbers were totally different. Looks like we will be getting $1600 back and owe State $40. Student loan interest helped. Next year we wont be able to do that since our income is going over $150k. Thanks! I love this forum. –  NOVA703 Jan 23 '12 at 15:30
add comment

1 Answer 1

Four possible reasons for the difference:

  • Taxable Income: Did you use Taxable Income the Turbotax tool? This would be after removing the amount withheld for health insurance and 401K.
  • State Income Tax. If you itemize you can reduce your taxes, but you will have to add as income your state income tax refund from last April.
  • Changes in withholding: Did you change jobs, or get a big bonus? Either Year? This can cause problems in withholding.
  • Education costs: some are credit,s some are deductions. Remember 25% of $2300 is more than $500 of the difference.
share|improve this answer
add comment

Not the answer you're looking for? Browse other questions tagged or ask your own question.