I'm married with no kids and my wife owns the house we live in. We both have claimed a withholding allowance of 1 (each on our individual jobs). We both invest in our 401(k)s. I contribute 6% of my income and she contributes 5%.

At this point we owe about $7000 in taxes per TurboTax (we haven't filed yet only calculated). We owe what we owe and we will pay IRS its due. It was our first year or marriage so we realized changes that we need to make with our deductions and such.

For 2013 for the taxes we owe, I'm wondering if there is a way to lower our tax bill before we file returns before April 15th.

  • I think you're confusing lowering tax bill with lowering the amount you need to pay on April 15th. You're now in trouble because you had too low withholdings. Reduce the allowances to zero, and follow the worksheet on W4 to calculate the appropriate withholdings for you.
    – littleadv
    Feb 5, 2014 at 22:09

2 Answers 2


If you are able to deposit to an IRA and take a deduction, that will impact your return. $5500 each, $11K total will save you $2750 if you are in the marginal 25% bracket. (For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000)

Is the $7000 due to side income from consulting? I recall that was an issue that might have caused you to have a high amount you'd owe now. I ask because it's odd to owe so much based on 1 withholding allowance unless there are some unusual factors at play.

This is one situation where filing separately might help, as it may allow your wife to itemize her interest and property tax, as those are her obligations. Aside from that, you might need to adjust your W4 allowances to zero and still withhold extra each check.

  • Yes, that is due to side consulting plus being a little stupid about my finances :). Can I open IRA even after I've put away 6% in 401k?
    – Gabbar
    Feb 5, 2014 at 19:05
  • Stupid? Hardly. Hang around here a bit more and you'll have a masters of finance in short order. I updated answer to include IRA phaseout numbers. Start to plan for 2014 to see how you can avoid the big bill. Feb 5, 2014 at 20:04

If you have self-employment income and can't use a deductible IRA to lower taxes because of 401(k) participation and income limits, there is still the option of funding a SEP-IRA for that SE income. You can open and fund a SEP as late as the extended due date of the tax return, October 15. A SEP allows you to defer roughly 20% of your self-employment income to the IRA and save income taxes on the amount deferred, which can be significant when the SE income is on top of other earned income. SEP-IRAs are offered at all the large discount brokers and mutual fund companies; for a sole proprietor it's not much more complicated than opening an IRA.

It's probably too late now but anther helpful thing for lowering SE income is to spend money on any needed capital items - e.g. a computer - before the end of the year, and elect to expense the entire cost under Section 179. So if you bought anything that you depreciated on that tax return you prepared, instead consider electing under Section 179.

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