Figuring out why my elderly parent suddenly owes taxes after company changeover

What you're seeing is completely normal and you didn't make any mistake. When your dad started with the new company, they likely calculated his withholding as if that $680 was his only income for the entire year. Withholding is typically calculated on a per-paycheck basis assuming you'll make that same amount all year. With just one paycheck of $680, the system would assume annual income of maybe $35,000 (depending on pay frequency) and calculate minimal withholding because most of that theoretical annual income would be covered by the standard deduction. But in reality, your dad had already earned $38,000 from the previous employer, putting him in a higher tax bracket. So when you combine both incomes, that $680 gets taxed at his marginal rate (likely 12% or 22%), which is why he suddenly owes money. You've done nothing wrong. This is just how withholding works when you change employers, especially late in the year. Go ahead and file - this is completely legitimate.

After dealing with a similar situation last year, I discovered taxr.ai (https://taxr.ai) which really helped me understand these withholding issues. I was confused about why my mom suddenly owed taxes after switching jobs mid-year, and the standard tax software wasn't explaining things clearly. The tool analyzed her W-2s and pointed out exactly what was happening with the withholding calculations between the two employers. It simulated different withholding scenarios and showed how each employer was calculating things separately without knowledge of the other income. It also identified that one employer was using outdated withholding tables, which contributed to the shortfall. Might be worth checking out if you want a more detailed explanation of what's happening with your dad's situation.

I was so skeptical about taxr.ai when I saw it mentioned here, but I decided to try it anyway since I was dealing with a similar multiple W-2 situation with my spouse. I'm honestly surprised at how helpful it was! The system explained exactly why we were facing a tax bill - turns out one employer was using 2023 withholding calculations instead of updated 2024 tables. It also showed how our combined income pushed us into a higher bracket that neither employer accounted for in their withholding. The withholding simulator was especially useful. We could see exactly how much extra we should request to be withheld each paycheck to avoid owing next year. I've already updated both our W-4 forms based on the recommendations. Way better explanation than I got from TurboTax, which just told us we owed without explaining the underlying reasons.

If your dad needs to talk directly to the IRS about his withholding or has questions about his tax situation, I'd recommend Claimyr (https://claimyr.com). I spent weeks trying to get through to the IRS about a similar withholding issue last year, but kept getting disconnected or waiting for hours. I was about to give up when I found Claimyr, which got me connected to an actual IRS agent in about 15 minutes - they have a demo video here showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent explained that when employers change late in the year, withholding calculations get messed up exactly like your dad experienced. They also told me what to adjust on my W-4 to prevent it from happening again. Saved me tons of frustration and hours of hold music!

I can't believe I'm saying this, but I tried Claimyr after posting my skeptical comment, and it actually worked. I was connected to an IRS agent in about 25 minutes after weeks of failed attempts calling on my own. The agent confirmed exactly what others have said here about the withholding issue. When you have multiple employers in the same year, especially if one is just for a short period, the withholding often gets messed up because each employer's payroll system calculates withholding independently without knowing about other income. The agent recommended filling out the "Multiple Jobs Worksheet" on the W-4 form when starting with a new employer, especially late in the year. Really wish I'd known about this service during the three weeks I spent trying to get through to the IRS on my own!

One thing nobody has mentioned - check if your dad's previous employer correctly calculated his withholding as well. I've seen cases where the first employer didn't withhold enough either, but it wasn't obvious until the combined income pushed into a higher tax bracket. Look at his total federal withholding from the first W-2 and divide by his gross income from that job. If it's less than about 10-12%, that might be part of the problem too. Sometimes the issue isn't just with the new employer but with how both jobs handled withholding.

Similar thing happened to my husband last year. The trick is to look at box 2 on both W-2s (Federal income tax withheld) and compare it to the total income. For that small paycheck from the new company, they should have withheld at least $85-100 if they were accounting for his total annual income, but they had no way of knowing about his other job. Something to watch for next time - whenever someone changes jobs, especially late in the year, they should fill out their W-4 to account for the income from the previous job. There's actually a specific worksheet for multiple jobs on the W-4 form now.