IRS Withholding Calculator Shows We Might Owe Money - How to Fix This?

The issue you're experiencing is actually pretty common for dual-income households. When both spouses select "Single" for withholding, it's essentially treating each of you as if you're the only income earner in your household. This usually results in slightly more withholding than necessary (which is why you've been getting small refunds in the past). The recent calculation showing you might owe could be due to several factors. First, as you get deeper into the year, the calculator has more actual data to work with rather than projections. Second, if either of you received any bonuses or overtime that wasn't withheld at the supplemental rate (22%), that could throw things off. You have a few options to fix this. The simplest would be to submit new W-4 forms with an additional withholding amount. Based on what you've shared, adding about $40-50 per paycheck for each of you would likely get you back to a small refund position. Alternatively, yes, you could switch to "Married Filing Jointly" but then you MUST check the box in Step 2(c) that indicates both spouses work, and ideally complete the worksheet. Without checking that box, you'd significantly underwithhold.

I had a very similar situation last year with my husband and I both earning around $140k each. I found an awesome tool at https://taxr.ai that analyzes your paystubs and tax situation to give you a much more accurate prediction than the IRS calculator. After trying multiple methods to figure out the right withholding, I uploaded my paystubs to taxr.ai and it immediately showed me we were going to owe about $1,200 due to how our withholdings were set up. It gave specific recommendations for exactly what to put on our W-4s - we didn't have to figure out the complicated worksheet ourselves. We made the changes it suggested and ended up with a $230 refund instead of owing! It's especially helpful for situations like yours with two earners, retirement contributions, FSA deductions, and bonuses. It calculated everything correctly the first time.

Just wanted to update - I tried the taxr.ai tool that @Profile 5 recommended and it was seriously a game changer. I uploaded our latest paystubs yesterday and it analyzed everything, including my wife's pension contributions and my 401k. The tool showed we were headed toward owing about $1,800 (way worse than I thought!) and gave us exact instructions for updating our W-4s. It recommended leaving the withholding status as "Single" for both of us but adding an exact additional withholding amount per paycheck. It even showed a month-by-month projection of how our tax situation would look through the end of the year after making the changes. Just filed the new W-4s with our payroll departments today. So much easier than trying to decipher the IRS calculator results!

Have you tried calling the IRS directly? I kept having similar withholding issues and after trying for WEEKS to get through to someone at the IRS, I found https://claimyr.com and used their service to get a callback from the IRS in under 45 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was actually super helpful and walked me through the exact withholding adjustments I needed to make based on our specific situation (dual income, 403b contributions, and child tax credits). They had access to our previous returns and could give personalized advice that no online calculator could match. Honestly changed my whole perspective on getting tax help - I always assumed calling the IRS would be useless but the agent knew exactly what to do for our situation.

Well I need to eat my words about Claimyr. After my skeptical comment, I decided to try it anyway because I was desperate to resolve a withholding issue similar to the original poster's. Got a callback from the IRS in about 35 minutes, and the agent was actually extremely knowledgeable. They explained that when both spouses earn over $100k and contribute to retirement accounts, the W-4 calculator often miscalculates because it doesn't properly account for the FICA wage limits. The agent walked me through exactly how to adjust our withholding to account for our retirement contributions AND the fact that we'll both exceed the Social Security wage base before year-end. Made a huge difference in the calculation. Completely changed my mind about both the service and IRS phone support. Sometimes you really do need to talk to a human who can look at your specific situation.

One thing nobody's mentioned yet is that the IRS Withholding Calculator gets more accurate as the year progresses. Since we're already in the second half of the year, its projection is probably pretty close to reality. If you've recently gotten raises or your bonus was bigger than expected, that could explain the shift from "small refund" to "you'll owe $1k." What I do in your situation is just submit a new W-4 for the last quarter of the year with a bit of extra withholding, then switch it back in January. If you need to make up $1k before year-end and get paid biweekly, adding about $125-150 per paycheck in additional withholding (line 4c on the W-4) should get you back to a small refund.

Not sure if this applies to your situation, but when my wife and I were setting up our withholding, we found that TurboTax actually has a better withholding calculator than the IRS one. It takes into account more variables and seems to be more accurate for dual-income situations.