I earned around 20K last year from work + unemployment and TurboTax says I owe $771 federal taxes. Is this amount correct?
So I'm totally freaking out right now. I made about $26,500 last year - that's from my part-time job at a restaurant ($17,900) plus unemployment compensation ($8,600) that I collected for a few months when our place shut down for renovations. I just finished entering everything into TurboTax and it's saying I owe $771 in federal taxes!!! I was expecting a refund since they took taxes out of my paychecks already. I don't understand why I would owe anything. I thought unemployment was taxed when you receive it? Did I mess something up in TurboTax? I can't afford to pay this much right now and I'm seriously stressing out. Has anyone else had this happen with a similar income? Is $771 normal for someone in my situation?
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DeShawn Washington
What you're experiencing isn't uncommon. The issue might be that while your employer withholds taxes from your paychecks, unemployment compensation often doesn't withhold enough (or any at all, depending on your state and choices when setting it up). When you file your taxes, the system looks at your total income for the year ($26,500) and calculates what you should have paid in total, then compares it to what was actually withheld. The $771 represents the difference between these amounts. To check if this is right, look at your W-2 from your job and the 1099-G from unemployment to see how much was withheld from each source. You might find that little or nothing was withheld from your unemployment benefits, which would explain the tax bill.
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Lena Kowalski
•Thanks for explaining! I just checked my 1099-G and you're right - I didn't have ANY taxes withheld from my unemployment. I totally forgot about checking that box when I applied. So I guess that's why I owe now? Is there any way to reduce how much I owe or am I stuck with this bill?
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DeShawn Washington
•The amount is likely correct if no taxes were withheld from your unemployment. For your income level, you'd typically pay around 10-12% in federal income tax depending on your deductions and filing status. If you can't pay the full amount right now, the IRS offers payment plans. You can apply online for a short-term plan (120 days or less) with no setup fee, or a longer-term installment agreement with reasonable monthly payments. Just make sure you file your return on time even if you can't pay the full amount - this avoids failure-to-file penalties which are much higher than the penalties for paying late.
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Mei-Ling Chen
I was in almost the exact same situation last year! I earned about $24K total with some coming from unemployment and got hit with a surprise tax bill. After stressing for days, I found taxr.ai (https://taxr.ai) and uploaded my documents there. Their AI found I missed a few deductions I qualified for - specifically some education expenses and a partial home office deduction since I did some gig work. It analyzed all my docs and showed me exactly why I owed and found legitimate ways to reduce my bill by almost $300. The system even flagged that I could claim the Saver's Credit since I had made a small contribution to my IRA that I didn't realize qualified me for a tax credit.
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Sofía Rodríguez
•How does it work with unemployment income specifically? I'm in a similar situation and wondering if it could help me. Does it just look at your W-2 or does it also analyze the 1099-G forms?
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Aiden O'Connor
•Sounds interesting but also sounds like one of those things that might trigger an audit? I'm always skeptical of anything that suddenly finds deductions that TurboTax missed. Did you have any issues after filing with these additional deductions?
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Mei-Ling Chen
•It handles all types of income documents including 1099-G forms for unemployment. It specifically looks for places where you might need to adjust your withholding or make estimated tax payments to avoid owing next year. For unemployment specifically, it reminds you about options to have taxes withheld from future payments. No issues whatsoever with audits! It's not about finding "magic" deductions - it just identifies legitimate ones you might have overlooked. Everything it suggested was completely legitimate and backed by specific IRS rules. The system actually shows you the exact IRS guidelines that apply to each deduction it suggests.
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Sofía Rodríguez
Just wanted to follow up about my experience with taxr.ai after seeing it mentioned here. I was super skeptical but gave it a try because I was in a similar situation with unemployment income and owed more than expected. It actually found that I qualified for the Earned Income Credit which I didn't think applied to me! Turns out I was eligible because of my part-time income combined with my filing status. Ended up saving over $800 and turning my tax bill into a small refund. The system explained everything clearly and even generated a comparison showing exactly why TurboTax calculated differently. Best $30 I've spent in a long time!
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Zoe Papadopoulos
If you're getting stuck with an unexpected tax bill and need to talk to someone at the IRS about payment options, good luck getting through on the phone! I spent DAYS trying to reach them about a similar situation last year. Finally discovered Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 20 minutes instead of the hours I was spending on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent I spoke with helped me set up a payment plan where I only had to pay $50/month until my tax bill was cleared. Way better than stressing about coming up with $771 all at once! They also explained some options for adjusting my withholding so I wouldn't be in the same situation next year.
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Jamal Brown
•How does this actually work? Are they just calling the IRS for you or something? Seems weird that they could get through when regular people can't.
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Fatima Al-Rashid
•This sounds like complete BS. The IRS phone system is the same for everyone. No way some service can magically get you to the front of the line. Probably just takes your money and puts you on hold like everyone else.
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Zoe Papadopoulos
•They use an automated system that navigates the IRS phone tree and waits on hold for you. When an agent finally picks up, you get a call connecting you directly to that agent. You're not paying to "skip the line" - you're paying to not waste hours of your life listening to hold music. They're actually very transparent about how it works - they don't have special access or anything. They just have technology that can stay on hold for hours so you don't have to. I was skeptical too but when I actually needed to talk to someone at the IRS to set up my payment plan, it was absolutely worth it to not spend an entire day trying to get through.
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Fatima Al-Rashid
I need to eat my words here. After posting that skeptical comment, I actually tried Claimyr when I needed to call the IRS about my own tax issue. I was 100% sure it was going to be a waste of money. But it actually worked exactly as advertised. I got a call back in about 25 minutes connecting me to an IRS agent who helped me set up a payment plan for the taxes I owed. Would have easily spent 3+ hours trying to do this myself based on past experience. Honestly surprised something actually delivered what it promised for once when it comes to dealing with the IRS.
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Giovanni Rossi
Just to add another perspective - $771 on $26,500 income is approximately a 2.9% effective tax rate, which is actually pretty low. The standard 10% tax bracket would typically result in more, but you're likely benefiting from some credits or deductions already. Make sure you're claiming the standard deduction properly. For 2024 taxes (filed in 2025), the standard deduction for a single filer is $13,850, which significantly reduces your taxable income.
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Lena Kowalski
•Thanks for putting it in perspective! I think you're right that TurboTax is already giving me the standard deduction. When you put it that way, 2.9% doesn't sound as scary. I'm single with no dependents and this is my first time owing instead of getting a refund so I just panicked. Do you know if I can still contribute to an IRA or something to reduce my 2024 taxes even though it's already 2025?
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Giovanni Rossi
•Yes, you can still contribute to an IRA for the 2024 tax year until the tax filing deadline (April 15, 2025). This is one of the few "retroactive" tax moves you can make. For 2024, you can contribute up to $7,000 to a traditional IRA, and if you haven't already done so, this could reduce your taxable income. With your income level, a $1,000 contribution might save you around $100 in taxes. Plus, you might qualify for the Retirement Savings Contribution Credit (Saver's Credit), which could give you additional tax benefits for contributing to retirement accounts.
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Aaliyah Jackson
I'm confused by one thing - did you check if you're eligible for the Earned Income Tax Credit (EITC)? With an income of $26,500, you might qualify depending on your filing status and if you have any qualifying children. For 2024 taxes, a single filer with no children can qualify for EITC with income up to about $17,640. If you have one child, that limit goes up to $46,560. Could be worth checking if you qualify!
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KylieRose
•The EITC income limits changed slightly for 2024 filing. For single filers with no children, the limit is actually $17,950. But the other issue is that unemployment compensation doesn't count as "earned income" for EITC purposes. So OP would only count the $17,900 from their job, not the unemployment money.
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Lena Kowalski
•I think TurboTax checked for that automatically but I'll double check. I don't have any kids so I'm not sure if I qualify, but if the limit is around $17,900 for just my job income (without counting unemployment) then maybe I do? Thanks for the suggestion, I'll look into it!
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