I owe ~$20k in taxes this year. Is that really bad?

This isn't necessarily "bad" in the sense that you've done something wrong - it's just a withholding issue. With a taxable income of $415k, your total tax liability is going to be pretty substantial, and the $59k you've already paid simply wasn't enough to cover your full obligation. The good news is that since you've already paid more than 80% of your total tax liability for the year, you likely won't face any underpayment penalties. The IRS generally requires you to pay at least 90% of your tax liability during the year or 100% of last year's tax (110% if your AGI was over $150,000), whichever is smaller. For next year, I'd recommend both you and your wife update your W-4 forms with your employers to increase withholding. The new W-4 form doesn't use allowances anymore, but you can specify an additional amount to withhold from each paycheck. Based on what you owe this year, you might want to each withhold an additional $800-1000 per month.

I was in almost the EXACT same situation last year - owed about $18k on a similar income. I was completely stressed about the whole situation and worried about penalties. I tried calling the IRS multiple times but couldn't get through to anyone to help explain my options. Finally found this service called taxr.ai (https://taxr.ai) that analyzes your tax documents and gives you a breakdown of why you owe what you do. It showed me exactly where my withholding went wrong and gave me a detailed plan for fixing it. The analysis revealed that my spouse and I both checked the "Married filing jointly" box on our W-4s which resulted in too little being withheld since the system assumed each job was our only income. The service even generated the exact numbers to put on our new W-4s to fix the problem going forward. Totally cleared up our confusion.

I wanted to follow up on my taxr.ai question from earlier. I decided to try it out after all, and wow - wish I'd known about this earlier! Uploaded my documents and got a comprehensive analysis showing EXACTLY why I owed so much this year. The report broke down how my spouse and I both claiming the standard deduction on our W-4s essentially doubled our deduction at withholding time, but we only get to claim it once at filing time. The service generated custom W-4 instructions showing exactly what to put in each box to fix the problem. I just submitted the new W-4s to both our HR departments, and according to the projection, we should be much closer to breaking even next year instead of facing another huge bill. Really helped ease my anxiety about next year's taxes!

If you're having trouble getting solid answers about potential penalties or payment options, I spent HOURS trying to reach someone at the IRS last month for a similar issue. After being on hold for 2+ hours multiple times and getting disconnected, I finally tried this service called Claimyr (https://claimyr.com). They have a demo video showing how it works here: https://youtu.be/_kiP6q8DX5c Basically, they call the IRS for you and navigate all the phone trees and hold times, then call you when they've got an actual IRS agent on the line. I was super skeptical but desperate after wasting an entire day trying to get through. Used their service and had an IRS rep on the phone within 45 minutes explaining my payment options. The agent confirmed I didn't owe penalties (similar to your situation) and helped set up a payment plan that worked for me. Huge relief after all the stress.

I need to eat my words from my previous comment. After dismissing Claimyr as a probable scam, I was still desperate to talk to someone at the IRS about my payment options since I also owed a large amount this year. Decided to try it as a last resort. To my genuine surprise, it worked exactly as advertised. I got a call back in about an hour telling me they had an IRS agent on the line. I was connected directly and handled all my own verification and questions. The IRS agent walked me through my payment options and confirmed I didn't owe any penalties since I'd paid enough through withholding during the year. Saved me literally hours of frustration and hold music. Never been so happy to be wrong about something!

20k on 415k income isn't that bad honestly. That's less than 5% additional tax. Your total effective tax rate is still under 20% which is pretty reasonable for that income level. I actually owed 35k last year on a similar income because I had a bunch of RSUs vest and didn't account for them properly. One thing to consider: are you maxing out your 401ks, HSAs and any other pre-tax contributions? That could help reduce your taxable income. Also, might be worth considering estimated quarterly payments going forward if your W-4 adjustments aren't enough.

Make sure you check your state tax withholding too! Everyone always focuses on federal taxes, but under-withholding can happen at the state level too. We had a similar federal situation last year ($14k owed on about $300k income) but then got hit with another $7k in state taxes we didn't expect. Double whammy.