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My wife and I each make $50k in the USA at the same employer. I noticed on her pay stubs the line for federal taxes said "$0", while mine is closer to $70, so we contacted her employer. They messed up on this 4 years previously, by changing her deductions in the computer "1" to "6" (though they had a scan of our W-4 that said "1"), so I assumed they made the same mistake again.

Now, we contacted the employer, they claim they listed "2" dependents. Since we have a new child, this is correct. We didn't update the W-4 after that fact, so don't know how they came up with the number. We submitted the same W-4. Anyway, the person in charge of pay claims with 2 dependents she doesn't owe any taxes. Does this seem correct that she wouldn't be paying federal taxes?

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Owed tax on 50k is roughly zero after the child tax credit (note: you will actually owe some if you got those advance child tax credit checks in the mail) That’s why they’re telling her no withholding is needed. You didn’t put both kids (or have them put that for you, however that worked) so you’re getting the small withholding. That’s all fine so far.

What’s more important though: the second income is all tax, and all at a higher rate for the most part, since it’s on top of the first one. So it may need more withholding.

When you have two incomes, there’s a box you check ‘withhold at higher single rate’. Do that on one of your two W4s - doesn’t matter which if they’re both the same amount. That way one of your checks withholds the higher amount. I also would put zero dependents on that one. That way you aren’t being double counted.

The problem is that the taxes are like this:

50k: -12950 (personal deduction) = taxable 37050. Tax on the first 10k or so is 10%, and the next $30k is 12%. That’s nearly $4k- and since you have two kids the child tax credit is $4k, which means owed tax is zero. Great!

But add the second 50k:

50k-12950 = 37050. Around 3K of that is taxed at 12%… the rest is taxed at 22%. So a bit over $5k of tax for this portion, and no child tax credit to offset it. That’s as opposed to under $4k for hers - over $1k more for the second income even before the credit.

It might be less based on the fact that you have health insurance and such probably coming out. That’s all effectively coming out of the 22% part. But point is, it’s more. Check that box on yours and it will be correct.

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  • Regardless of what is withheld it should all balance out at the end of the year, right? (Setting aside the idea that the government gets to collect interest on it the whole time...)
    – corsiKa
    Jan 12, 2022 at 22:47
  • Assuming you don’t underpay by too much yes (there’s a penalty if it’s more than a grand, with some exceptions).
    – Joe
    Jan 12, 2022 at 23:03
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How much taxes you'll owe really depends on a lot of things that go into your tax return, not necessarily just the wages. There's a nifty app on the IRS website that helps calculating the values to fill on the W4, you may want to use it.

What I find odd is that the withholding differs between the two of you even though you seem to imply that you filled W4 the same way, that shouldn't happen.

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    Important to remember that just because you have 2 dependents doesn't mean you have to claim them on your W-4. That's just a mechanism to set the amount withheld. The IRS doesn't actually care what is on your W-4 as long as you have enough money withheld at the end of the year. Just do what the calculator says and you should come out square at tax filing time.
    – Seth R
    Jan 12, 2022 at 16:31

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