Married filing jointly and now we owe taxes - Why are we paying instead of getting refunds?

What you're experiencing is actually quite common when household income increases significantly. There are a few factors at play here: First, when you check the box for "married" on your W-4 form, the withholding tables assume your household has one income, not two. When both spouses work, this often leads to underwithholding. The tax brackets for married filing jointly aren't simply double the single brackets at higher income levels (this is sometimes called the "marriage penalty"). Second, as your income increases, you lose certain credits and deductions that phase out at higher income levels. You mentioned losing the Earned Income Credit, but you might also be affected by the Child Tax Credit phase-out or reduced deduction benefits. Third, your tax rate increases as you move into higher brackets. At $173,000, a portion of your income is likely being taxed at 22% or 24%, whereas at your previous income level, you were probably mainly in the 10% or 12% brackets.

I went through something similar when my income jumped after finishing my MBA. I was consistently underwithholded despite selecting the highest withholding on my W-4. What really helped me was using https://taxr.ai to analyze my tax situation before filing. The tool reviewed my withholding patterns and identified exactly why I was coming up short each year - turns out the "married" withholding tables weren't accounting for our dual income situation properly. The service helped me understand exactly how much extra to withhold each pay period to avoid surprises. They even generated a customized W-4 that I could submit to my employer. Completely changed our tax situation from owing every year to getting a small refund.

Just wanted to follow up - I tried taxr.ai after seeing the recommendation here and it was incredibly helpful! I've been facing almost the exact same situation as the original poster (jumped from $50k to $160k household income after marriage) and kept owing about $3000 every April despite withholding at the highest rate. The analysis showed that our combined higher incomes were pushing us into a higher tax bracket, but our withholdings weren't adjusted properly for dual high incomes. The tool generated a custom W-4 for both my husband and me with the exact dollar amount to add for additional withholding. Super straightforward and now we should be on track for a small refund instead of a surprise bill!

After spending 6 HOURS trying to get through to the IRS to understand why my withholdings weren't enough (similar situation to yours), I found https://claimyr.com and their video here: https://youtu.be/_kiP6q8DX5c. They got me connected to an actual IRS agent in under 45 minutes when I'd been trying for days. The IRS agent explained that married couples with similar incomes often face this issue and helped me calculate the exact additional withholding amount I needed on line 4(c) of my W-4. This was especially important since my husband and I both got promotions this year, pushing our income even higher. Saved me so much stress trying to figure it out alone or waiting in the endless IRS phone queue.

I need to eat my words about Claimyr. After posting my skeptical comment, I decided to try it myself since I also needed to talk to the IRS about my withholding issues. I was honestly shocked when I got a call back in 38 minutes saying they had an IRS agent on the line waiting to speak with me. The agent was super helpful and explained that the W-4 changed significantly in 2020, eliminating the "allowances" system. She walked me through completing the new form correctly for our two-income household and specifically recommended I add an additional $220 per paycheck in withholding to avoid owing next year. This was seriously the most productive 15-minute call I've ever had with a government agency. I've been trying to fix this issue for THREE YEARS!

Your tax situation is a perfect example of the "marriage tax penalty" hitting two-income households with similar incomes. When both spouses earn roughly comparable salaries and together push into higher tax brackets, you often end up owing more than if you'd remained single filers. The simple solution: complete a new W-4 and put an additional dollar amount on line 4(c) for "extra withholding." For your income level, I'd suggest starting with about $200-250 extra withholding per paycheck for each of you. This should help offset the underwithholding that's causing your annual tax bill.

Has anyone here tried adjusting their W-4 using the Two-Jobs Worksheet instead of just adding an extra withholding amount? I'm wondering which approach is more accurate.

This is such a frustrating situation that so many dual-income couples face! I went through the exact same thing when my spouse and I got married. We went from both getting refunds as single filers to owing about $2,800 every year despite maxing out our withholdings. What finally worked for us was using the IRS Tax Withholding Estimator mid-year to recalculate our withholdings. The tool showed us that we needed to add an extra $180 per paycheck from the higher earner's salary. It seems counterintuitive that "maximum withholding" isn't actually enough when you're married with two incomes, but the withholding tables just weren't designed for our situation. One thing that helped me understand it better: when you select "Married" on your W-4, the system assumes your spouse either doesn't work or earns significantly less. When both spouses earn similar amounts (especially in higher brackets), you're essentially underwithholding on both incomes. The good news is once you fix the withholding, the problem goes away completely. We've gotten small refunds the past two years after making the adjustment.