Freaking out - I owe $12k in federal taxes but getting $4k state refund. What am I messing up on my W4?

Thanks for your reply! I think you might be onto something with the W-4 redesign - I honestly can't remember the last time I updated mine, but it was definitely before 2020. I do have a side gig that brings in about $15k annually, but I wasn't paying quarterly estimated taxes on it. Could that be a big part of the problem? Also, I recently got married but didn't change my withholding - I just checked "Married" on my W-4 without doing anything else.

That side gig income is almost certainly the main culprit here! When you have self-employment income without withholding, you should be making quarterly estimated tax payments. The $15k in additional income would not only be subject to income tax but also self-employment tax (about 15.3%), which adds up quickly. The marriage status without adjusting your withholding properly could be contributing too. When you select "Married" without additional adjustments, the system assumes your household has just one income and withholds at a lower rate. If both you and your spouse work, you need to account for that on your W-4. I'd recommend using the IRS withholding calculator immediately and submitting a new W-4 to your employer. You should also start making quarterly estimated payments for your side gig income.

How does this actually work? Can you upload previous tax returns too? I'm in a similar situation where I'm getting killed on federal taxes but my state return is fine.

Sounds interesting but I'm skeptical. Does it really tell you anything different than just using the IRS withholding calculator? That's free and government-approved.

It can analyze both current and past returns, which helps it spot trends in your tax situation over time. You can upload W-2s, 1099s, previous returns, and it identifies patterns that might be causing problems. In my case, it actually found a deduction I missed from my home office that saved me about $800. The difference from the IRS calculator is it gives you a complete explanation of why you're owing so much and exactly what's happening with your specific tax situation. The IRS tool just gives you withholding numbers without really explaining the underlying issues. It also helps with optimizing tax strategies beyond just withholding, like retirement contributions, timing of deductions, etc.

Wait how does this actually work? They just call the IRS for you? Why would that be any faster than me calling myself?

Sounds like a scam to me. No way some random service can get through the IRS phone lines faster than anyone else. Those lines are jammed for everyone. They're probably just taking your money and putting you on hold just like if you called yourself.

They don't just call for you - they use an automated system that navigates the IRS phone tree and constantly redials when there are busy signals. Think of it like having a robot assistant that keeps trying the IRS line over and over until it gets through, while you go about your day. They call you when they actually have an IRS representative on the line, so you're only getting on the phone when there's already someone there to help you. It saved me hours of frustration. The IRS phone system is absolutely swamped, especially during tax season, and they're understaffed. This just helps you skip that frustrating part.

Just checked my forms from this year and last year. You're right - my total federal tax (line 16) jumped from $22k last year to $37k this year! But my federal withholding only went up slightly. I think the side gig income plus not adjusting my W-4 after getting married really did mess things up. Now I'm wondering if I should adjust my California withholding too, or if I should leave it alone since I'm getting a refund there? I don't want to end up owing both federal AND state next year.

That's a huge jump in your tax liability! Definitely don't leave your California withholding alone just because you got a refund this year. Your goal should be to get close to zero on both returns (not owing much and not getting much refunded). For the most accurate withholding, I'd recommend using both the IRS withholding calculator for federal and the California FTB's DE 4 form for state withholding. They'll help you account for both your W-2 income and your side gig. Also, you should start making quarterly estimated tax payments for your side business - that alone would have prevented a big chunk of what you're owing.

Not OP but this happened to me once. I filed MFJ on federal but accidentally filed as Single on my state return. Made a huge difference in what I owed vs. what I got back. Always double-check your filing status across both returns!

I checked and I'm using Married Filing Jointly for both returns. So that's not causing the issue. But I've realized I really messed up by not updating my W-4 after getting married and not accounting for my side income. I'm going to fix both issues right away! The good news is I just talked to the IRS about a payment plan (finally got through!) and they were actually super helpful. Going to spread the payments over 36 months which makes it much more manageable. And I'll be adjusting my withholding immediately so this doesn't happen again next year.