Video: Why Would I Owe Federal Taxes? (2024)

The IRS has revamped Form W-4. The content regarding changing "allowances" no longer applies to the new W-4 form.

Video transcript:

Hello, I'm Sara from TurboTax with some important information for taxpayers who need to make additional tax payments on April 15th.

Every year, certain taxpayers are surprised that they owe additional income taxes even though their employer withholds taxes from their paycheck each week. This is not as uncommon as you may think, and there are many reasons why it could happen.

Remember when you first started your job and your employer had you fill out a W-4 form? Well the more allowances you claimed on that form the less tax they will withhold from your paychecks. The less tax that is withheld during the year, the more likely you are to end up paying at tax time. But you can avoid this happening again by making changes to the form.

Essentially, the number of allowances you claim relates to your filing status and the number of dependents you anticipate claiming. If you over estimate your dependents or choose a filing status that you are ineligible for, then your withholding will always be less then the amount of tax you owe.

You need to remember that the W-4 form you fill out only applies to one employer. So if you earn income elsewhere, your withholding won't reflect this.You can correct this though. All you need to do is request additional amounts be withheld each period, regardless of the allowances you claim. You can select any additional amount you like to be withheld.

In a nutshell, over-withholding means you'll get a refund at tax time. Under-withholding means you'll owe. Many people try to get as close as possible to even so they get more money in their paychecks during the year, but don't owe a lot or get a bigger refund at tax time. The key is managing your withholding to get the result you are looking for.

With TurboTax Live Full Service, a local expert matched to your unique situation will do your taxes for you start to finish. Or, get unlimited help and advice from tax experts while you do your taxes with TurboTax Live Assisted.

And if you want to file your own taxes, you can still feel confident you'll do them right with TurboTax as we guide you step by step. No matter which way you file, we guarantee 100% accuracy and your maximum refund.