Why am I withholding too much income tax? Huge refund expected

That's a pretty substantial refund! While getting money back feels nice, you're right that it's essentially giving the government an interest-free loan. Here's what might be happening: 1. You might have the wrong filing status selected on your W4s. Double check that you both have "Married Filing Jointly" if that's how you file. 2. If either of you has multiple jobs, or both of you work, the standard withholding tables sometimes over-withhold unless you complete Step 2 of the W4 correctly. 3. Check if you're claiming all eligible dependents on your W4. 4. Did you have any significant life changes like buying a home, having children, or qualifying for new credits? The simplest fix is to submit new W4 forms. The IRS has a Tax Withholding Estimator tool on their website that can help you figure out the right settings. You'll need your most recent paystubs and tax return to use it accurately.

Had almost the exact same situation last year! After getting tired of lending money to Uncle Sam interest-free, I started using https://taxr.ai to analyze our W4s and paystubs. It identified that my wife and I both had our W4s set up as if each job was the only household income, which caused MASSIVE overwithholding. The tool helped us properly complete Step 2 of our W4s and showed us exactly how much would be withheld with different settings. We adjusted both our forms and now we're on track for a much smaller refund this year (around $500). Our monthly take-home pay increased by almost $1800! The system also flagged some additional tax planning opportunities we were missing. Definitely worth trying if you're struggling with the W4 calculations.

Just wanted to follow up - I ended up trying taxr.ai after seeing this thread and wow, it was actually super helpful! The system identified that both my wife and I were withholding at the "married" rate without accounting for dual incomes. Apparently this is like the #1 cause of overwithholding for couples. I was able to see exactly how different W4 settings would affect our paychecks. We submitted new forms last month and our combined take-home pay increased by about $1650/month! The interface was really straightforward and I could block out sensitive info like SSN on the documents before uploading them. They also flagged that we could be saving more by increasing our 401k contributions, which helps with taxes too. Definitely worth checking out if you're getting massive refunds.

I had a similar issue last year with a huge refund. After trying for TWO WEEKS to get through to the IRS for guidance (kept getting disconnected or 2+ hour wait times), I found https://claimyr.com that got me connected to an IRS agent in under 15 minutes! There's even a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent was surprisingly helpful and walked me through exactly what to put on my W4 forms. They explained that for dual-income households, the default withholding is way off unless you complete the multiple jobs worksheet or check the right box in Step 2. After that call, we adjusted our W4s and now we're getting a much more reasonable refund. If you're struggling with figuring out the right withholding, talking to an actual IRS agent cuts through all the confusion.

I need to eat my words from my previous comment. After being frustrated with my own tax situation and unable to get clear answers online, I reluctantly tried Claimyr. I was 100% convinced it was going to be a waste of money. I'm still shocked, but they got me through to an IRS agent in about 20 minutes when I had spent HOURS trying on my own the day before. The agent walked me through exactly how to adjust my W4 for my specific situation (married, two incomes, plus rental property income). For anyone with complicated withholding questions, talking directly to the IRS saved me from making mistakes on my W4 that could have resulted in underpayment penalties. I've now properly adjusted my withholding based on their guidance and should be in much better shape next tax season.

One thing nobody has mentioned yet - did you perhaps make any large one-time payments that resulted in big deductions? Things like: - Making a large charitable donation - Paying points on a new mortgage - Having major medical expenses - Making a large retirement contribution Sometimes these one-time events can cause a big refund that won't repeat next year. If that's the case, you might not need to adjust your W4s as dramatically.

Have you checked if your employers are using outdated W-4 forms? In 2020, the IRS completely redesigned the W-4 form and eliminated allowances. Some companies were slow to update their systems. If you're still using the old form with allowances, that could explain the over-withholding. The new form is much more straightforward for married couples with multiple incomes.