Thanks for mentioning this. We actually don't have kids yet, so I'm not sure if we'd qualify for the EITC. And honestly, I don't think either of us updated our W-4s after getting married - I didn't even know that was a thing we needed to do. Would fixing that help us for this year's taxes or just for next year?

You can still qualify for EITC without children, though the amount is smaller. It depends on your income level - for 2023 taxes, married couples filing jointly with no qualifying children can get EITC if their income is below about $24,210. Regarding the W-4 adjustments, unfortunately that would only help you for future tax years, not for the return you've already filed. But you should definitely both submit new W-4 forms to your employers right away to prevent this problem next year. When both spouses work, you often need to withhold at a higher rate than single filers to account for your combined income pushing you into higher tax brackets. The IRS has a Tax Withholding Estimator tool on their website that can help you fill out your W-4 correctly.

This is generally bad advice for most people. MFS rarely results in tax savings and actually disqualifies you from several tax benefits like education credits, child care credits, and earned income credit. It's usually only beneficial in very specific situations like when one spouse has income-based student loan payments or massive medical expenses.

Thanks for pointing this out! My income was definitely below those limits in 2021 (around $65k) so I was eligible for the full contribution. I think I might have been confused about how much I actually contributed - just double checked and it was exactly $6k, not $8k like I initially wrote. My memory isn't what it used to be lol. If I'm understanding everyone correctly, since the Roth contribution doesn't affect my tax liability and my income was too high for the Saver's Credit but below the Roth income limits, there's really no benefit to amending my return. Does that sound right?

That's exactly right. If your contribution was $6k (within the limit), your income was below the Roth IRA income thresholds but above the Saver's Credit limit, there's really no reason to amend your return. The IRS already has the information from the Form 5498 that your financial institution filed, and since Roth contributions don't impact your tax liability, you're good to go. One less thing to worry about!

Can you explain what a "backdoor Roth conversion" is? I keep hearing about it but don't really understand the concept or why it matters for record keeping.

This is super important! I messed this up my first year and both me and my parents got letters from the IRS because we had conflicting filings. Such a headache to fix.

I hadn't even thought about state taxes! I'm in Texas - do you know if they have state income tax here?

You're actually in luck! Texas is one of the few states with no state income tax, so you don't need to worry about filing a state return. Just the federal one. That makes things much simpler for you! If you ever move to another state though, definitely check their specific requirements. States like California, New York, and many others have their own income taxes with different thresholds and rules.

Good point! I just checked and you're right - my state withholding also changed on my part-time job. I'm in Illinois, and it looks like they increased the state withholding percentage at the same time as the federal. Any specific suggestions for handling state withholding with multiple jobs? Is it similar to federal or do they have different rules?

State withholding generally follows similar principles to federal, but each state has its own specific forms and calculation methods. For Illinois, they use your federal allowances as a starting point for state withholding calculations. I'd recommend checking the Illinois Department of Revenue website for their withholding calculator or Form IL-W-4. Since both jobs are now withholding correctly, you might just need to make sure your additional withholding amount on your full-time job's W-4 is adjusted downward to account for the new withholding happening at your part-time job. The goal is to get your total withholding across both jobs to match your expected tax liability.

That's actually by design! The 2020 W-4 redesign and IRS withholding tables are set up so that if you check the multiple jobs box, your second/lower paying job often has a higher withholding percentage. This is because the system assumes your first job already uses up your standard deduction and lower tax brackets, so additional income is taxed at higher marginal rates.

Wait, so if he enrolled in college classes the income limit wouldn't matter? Even at a community college? My daughter works part-time making about $8k but she's taking 3 classes each semester.

That's correct! If your daughter is under 24 and a full-time student (generally defined as taking a full course load for at least 5 months of the year), then the gross income test doesn't apply for determining if she's your qualifying child. She would need to meet the other tests: relationship (your daughter, so check), residency (lived with you for more than half the year), age (under 19 or under 24 if full-time student), and support (you provide more than half her support). The number of classes determines full-time status according to the school's definition, so 3 classes might qualify if her school considers that full-time.

Your friend is probably claiming her daughter as a qualifying child rather than a qualifying relative. If her daughter is a full-time student under 24, the income limit doesn't apply. The rules are different depending on which type of dependent they are.