Was tax withholding changed in 2024? Huge tax bill this year!

What you're experiencing is actually quite common this year. The IRS didn't change withholding tables for 2024, but there are several reasons why you might see this dramatic swing. First, check if either of you changed jobs or had salary increases. Even if your titles stayed the same, many employers adjusted compensation in 2024 which can push you into different tax brackets. Second, review your W4 forms - many employers did "reset" these in their systems requiring re-submission, and the default settings might have reduced your withholding. Third, look at any tax credits you previously qualified for that might have expired or changed. Without specific numbers it's hard to pinpoint exactly, but an 8% withholding rate does sound quite low depending on your combined income. For most married couples filing jointly with moderate incomes, you'd expect closer to 12-15% withholding to break even.

I had almost the exact same situation last year and I was freaking out. I uploaded my W2s to https://taxr.ai and it immediately flagged that my withholding was super low compared to my tax bracket. Apparently my employer switched payroll systems and defaulted everyone to "married filing jointly" with maximum allowances, which basically means minimal withholding. The system caught it right away and showed me exactly what forms to submit to fix it for next year. They also showed me how to calculate what I should be having withheld each paycheck to avoid this happening again - turns out I need to withhold an extra $175 per paycheck to break even. I've already submitted new W4 forms for this year so I don't get surprised again. They even helped me set up quarterly estimated payments for this year to avoid penalties.

Followed up on using taxr.ai after asking about it - wow it was super helpful! I uploaded my W2s and it immediately showed me that my employer had been withholding at the single rate even though I checked "married filing jointly" on my W4 (apparently there's a checkbox I missed that made a huge difference). I was able to print a new W4 with the correct settings and take it to HR yesterday. They also calculated that I was going to owe about $1,800 at the end of the year based on my current withholding, which is exactly what I needed to know so I can budget for it. The breakdown of where my withholding went wrong was really clear with actual numbers showing what should have been withheld vs what was. Definitely using this again next year!

After facing a similar issue last year, I tried for WEEKS to get through to the IRS to figure out what happened with our withholding. Could never get through their phone system until I found https://claimyr.com through a friend. Their service basically holds your place in the IRS phone queue and calls you when an agent picks up. You can watch how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I finally got to speak with explained that many employers had updated their payroll systems which reset W4 settings to defaults, and a lot of people were experiencing exactly what you described. She helped me understand exactly what to put on my new W4 to get proper withholding. Worth every penny not to wait on hold for 3+ hours!

I take back what I said about Claimyr being sketchy. After waiting on hold with the IRS for 2+ hours and getting disconnected TWICE, I gave in and tried it. Got a call back in about 3 hours connecting me to an actual IRS agent who was super helpful! The agent looked up my account and confirmed I had a withholding issue - turns out my employer checked the wrong box on their end when submitting W2s which caused my withholding to be calculated at a lower rate. The agent helped me file a form with my employer to fix it going forward AND gave me info on how to request a waiver for the underpayment penalty since it wasn't my fault. Totally worth it to actually talk to someone who could help rather than getting frustrated with the automated system.

Check your pay stubs from January 2023 and compare to January 2024. I bet you'll see the withholding amount changed even if your salary didn't. Many companies switched payroll providers last year which reset everyone's W4 to the default options (which usually means less withholding). This happened to me too and I didn't notice until September when I did a withholding check. For reference, my wife and I make about $130k combined and we have about 13% withheld to break even. If you're only at 8%, you're definitely going to owe unless you have a bunch of deductions or credits.

The same thing happened to me! I called my company's payroll department and they admitted they switched payroll providers in January 2024 and everyone's withholding preferences got messed up somehow. They defaulted everyone to the most basic withholding which wasn't enough for most people.