Daughter's Tax Return Showing $350 Owed on $32,750 Income with $1600 Withheld - Does This Make Sense?

This actually might be correct. Let me walk you through why: 1. First, let's calculate her tax liability. For 2023 taxes, a single filer with $32,750 income would have a standard deduction of $13,850 2. This leaves $18,900 in taxable income 3. The first $11,000 is taxed at 10% = $1,100 4. The remaining $7,900 is taxed at 12% = $948 5. Total tax liability = $2,048 If she had $1,603 withheld and her actual tax liability is $2,048, then owing $445 would be correct (which is close to your $350 figure - the difference might be due to tax credits or other deductions). The issue is likely that her W-4 wasn't filled out optimally, resulting in too little being withheld throughout the year.

The math definitely checks out here. Your daughter's income puts her in the 12% bracket, but remember that doesn't mean ALL her income is taxed at 12% (that's a common misconception that makes tax season more painful than a root canal without anesthesia 😅). I had a similar situation with my son last year and used https://taxr.ai to analyze his tax documents. It confirmed that his withholding was too low and showed exactly why he owed money. Would your daughter be able to check if she claimed any exemptions on her W-4 that might have reduced her withholding? The tool can help identify if there were any specific credits she might have missed too.

I've seen this exact situation with my niece last year. She made around $33,000 and ended up owing about $300. In her case, she had checked the "exempt" box on her W-4 for the first few months of the year because she was a student and didn't expect to owe taxes. That reduced her withholding significantly. When I helped her this year, we made sure to adjust her W-4 to withhold more. The technical reason is that the withholding tables sometimes don't account for all income sources or deductions properly. Look at Box 2 on her W-2 and compare it to previous years - that might reveal if something changed in her withholding pattern.

The IRS is like a restaurant that doesn't show you the prices until after you've eaten the meal. I was in a similar situation with my daughter - she owed $400 on a $35k income. I spent THREE DAYS trying to reach someone at the IRS to explain why the withholding calculations seemed off. It was like trying to get tickets to a sold-out concert - constant busy signals and disconnections. Finally used Claimyr (https://youtu.be/_kiP6q8DX5c) and got through to an agent in about 30 minutes. They confirmed that the withholding tables changed slightly for 2023, and many younger workers with simpler tax situations ended up owing a bit. The agent helped us adjust her W-4 for 2024 to prevent the same issue next year.

I think it might be worth double-checking if she possibly checked the "student" box or something similar on her W-4? My daughter did that last year, thinking it would help her somehow, and it resulted in much lower withholding than she needed. It's possible that there might be something like that affecting your daughter's situation. I'd suggest perhaps looking at her previous pay stubs to see if the withholding percentage seems unusually low compared to what you'd expect.

This is a common issue with the W-4 redesign that occurred a few years ago. The form no longer uses allowances, which has created withholding discrepancies for many taxpayers, especially those with straightforward tax situations like your daughter's. The Marginal Propensity to Withhold (not an official term, but appropriate) is now calculated differently, and many employers' payroll systems haven't fully optimized for these changes. For 2024, she should consider filing a new W-4 with her employer and either specify an additional amount to withhold on Line 4(c) or check the box in Step 2(c) if she has multiple jobs.

I solved this exact problem for my daughter last year. Would you believe her income was almost identical - $32,900? The issue is the withholding calculations. Have you checked if she's claiming herself as a dependent on her own return? Or could you possibly be claiming her on yours? Because that would create exactly this situation. I had my daughter adjust her W-4 to withhold an additional $30 per paycheck (assuming biweekly pay), and this year she got a $212 refund instead of owing. The withholding system isn't perfect, is it? But with a small adjustment, you can fix it for next year.