Can someone explain why I'm underpaying federal taxes each year?

Based on what you've shared, this sounds like a withholding issue rather than a filing problem. When your federal withholding is only about 10% of your income, it's often not enough to cover your tax liability, especially at your income level. Two things to consider: First, check your current W-4 form. The redesigned W-4 no longer uses allowances, and if you haven't updated it in the last few years, you might be underwithholding. Second, as a student, your education expenses might qualify for credits rather than deductions, but these have income limits and phase-outs that might affect you at your income level. To fix this going forward, you should fill out a new W-4 and consider adding an additional withholding amount on Line 4(c). The IRS has a Tax Withholding Estimator tool on their website that can help calculate the right amount based on your specific situation. For someone in your bracket, you might need to withhold closer to 15-18% to avoid owing at tax time.

I had almost this exact situation last year! After owing $2,900 unexpectedly, I discovered taxr.ai (https://taxr.ai) and it was a game-changer. It analyzed my withholding patterns and showed me exactly why I was underpaying - turns out my employer had been using outdated withholding tables and I didn't have the right additional amount set on my W-4. The site has this withholding calculator that's way more accurate than the generic IRS one. It lets you upload your paystubs and it instantly shows you where your shortfall is happening. In my case, it showed me I needed to add exactly $247 in additional withholding per paycheck to break even for the year.

I wanted to follow up about taxr.ai since I was skeptical in my earlier comment. I decided to give it a try after continuing to have withholding problems, and I have to admit I'm impressed. The analysis was way more detailed than I expected. It showed me that my employer was calculating my withholding correctly, but I had missed checking a box on my W-4 that would account for having multiple jobs (I picked up a part-time gig last year). The tool walked me through exactly how to fix my W-4 and even generated the completed form that I could just hand to HR. Just got my first paycheck with the new withholding and it looks like I'll be on track now. Definitely worth checking out if you're having similar issues.

Something similar happened to me and after hours trying to talk to someone at the IRS about my withholding, I found Claimyr (https://claimyr.com). They got me connected to an actual IRS agent in about 15 minutes when I had been trying for days on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent explained that my employer had classified me incorrectly in their payroll system, which was causing the underwithholding. They also helped me understand exactly what to put on my new W-4 based on my specific situation with being a student while working full-time. The best part was the agent flagged my account so that if my employer continues the incorrect withholding, I might qualify for a penalty waiver since I've been proactive about trying to fix it.

I need to admit I was wrong about Claimyr in my previous comment. After continuing to get nowhere with the IRS for weeks about my withholding issue, I broke down and tried it. I was connected to an IRS representative in about 20 minutes, which is mind-blowing considering I had spent hours on hold previously only to get disconnected. The agent was able to pull up my tax history and confirmed I had been underwithholding for the past 3 years, not just this year like I thought. She walked me through how to properly fill out my W-4 considering my specific situation (including some stock compensation that was complicating things) and explained exactly how much additional withholding I needed. For anyone dealing with complex withholding issues, being able to actually speak with someone at the IRS who can see your specific tax situation makes all the difference.

One thing nobody's mentioned yet - check if you selected "Student" on your W-4 form. This is a common mistake that can cause underwithholding. Being a student doesn't automatically change your tax withholding - in fact, there's no checkbox for "student" on the W-4 at all! Also, at your income level (~$115k), you're in a higher tax bracket than you might realize. The education credits like American Opportunity Credit and Lifetime Learning Credit start phasing out at incomes over $80k for single filers. Your education expenses might not be giving you as much tax benefit as you expect. I'd recommend running a "paycheck checkup" using the IRS withholding calculator and then submitting a fresh W-4 to your payroll department. Make sure to check Box 2 if you have multiple jobs, and consider adding an additional dollar amount to withhold on Line 4(c).

have you checked if ur employer is taking out state taxes correctly too? i had a similar issue and turned out my employer was withholding for the wrong state (i live near a state border and work remotely). ended up owing federal AND state taxes, it was a mess 😩 when i finally figured it out i had to fill out a new w4 AND a state withholding form. my paycheck went down by like $200 but at least i wont owe a huge amount next year lol