Why do I owe so much in taxes despite increasing withholdings? Help needed asap!

This doesn't look unusual at all - just a classic case of underwithholding. Your combined income puts you in a pretty high tax bracket, and the withholding tables don't always account for dual-income households correctly. The issue is that each of your employers calculates withholding as if that job is your only income. So your withholding is being calculated at a lower marginal rate than what applies to your combined income. This is a common problem for two-income households with similar earnings. For the immediate issue, paying and filing an extension is smart, but remember the extension only gives you more time to file - not more time to pay. The payment is still due by the filing deadline to avoid penalties. For the long term, you'll need to significantly increase your withholding. You can use the IRS Tax Withholding Estimator online to get a more accurate picture. With a baby on the way, you'll have an additional dependent which will help a bit, but you'll likely need to withhold an additional fixed amount from each paycheck to cover the shortfall. Filing separately almost never benefits married couples - especially with the income disparity between you two. The Roth 403b isn't affected by filing status - those contributions are already taxed at your current rates.

After reading your post, I immediately thought of something that helped me last year when I was in a similar situation with my spouse. We both had W-2 jobs and were shocked when we owed nearly $7k in taxes! I found this tool called taxr.ai (https://taxr.ai) that analyzes your tax situation and identifies exactly why you're underwithholding and how to fix it. You upload your pay stubs and last year's return, and it simulates different W-4 settings to optimize your withholding. For us, it revealed that we needed to check the "two jobs" box on our W-4s AND add an additional $230 withholding from each paycheck. Without the simulation, we would have continued underwithholding. The tool also helped us understand how our investment income was affecting our overall tax picture. With your baby on the way, it might give you peace of mind to get your withholding sorted out now rather than stressing about it all year.

Just wanted to update about my experience with taxr.ai that was mentioned above. I checked it out after posting here and wow - it was eye-opening! The tool showed us that even with our W-4 adjustments last year, we were still severely underwithholding because we both selected "Married Filing Jointly" on our W-4s without accounting for dual incomes. The simulator showed exactly how much extra to withhold per paycheck ($275 for me, $180 for my wife) to break even next year. It also projected how the child tax credit will affect our taxes once our baby arrives - looks like we'll get about $2,000 reduction in tax liability. The most helpful part was seeing how our current withholding would play out through the rest of the year. Without changes, we would have owed even more next year! Now we've updated our W-4s with our payroll departments and can stop worrying about another tax surprise.

Have you tried calling the IRS to get guidance? I had a similar situation last year and eventually got some helpful advice, but it took FOREVER to get through to them. I'd spend hours on hold only to get disconnected. Then I found this service called Claimyr (https://claimyr.com) that got me connected to an IRS agent in under 45 minutes. They have a video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained exactly what was happening with our withholding (very similar to your situation - dual income household not withholding enough) and walked me through exactly how to fill out our W-4s. She even calculated some numbers specific to our situation to make sure we wouldn't owe next year. Might be worth a shot before dropping money on a CPA if you can't get an appointment soon. The IRS agents know their stuff for these kinds of common situations.

I need to apologize about my skeptical comment. After struggling for almost 3 hours trying to reach the IRS yesterday (got disconnected twice after waiting over an hour each time), I gave Claimyr a shot out of desperation. I was connected to an IRS representative in about 35 minutes, and they cleared up my withholding confusion completely. The agent explained that with our income levels, we needed to not only check the "Multiple Jobs" box but also specify an additional amount to withhold on Line 4(c) of our W-4s. The agent calculated that we should withhold an extra $420 monthly between our two jobs to avoid owing next year. She also explained how the upcoming child tax credit would factor in and suggested we adjust again after the baby arrives. Now I understand why people would pay for this service - the time saved and stress avoided was absolutely worth it. Just wanted to share my experience in case others are on the fence.

A while back I was in a similar spot with me and my wife both making decent money but always owing taxes. We sat down with a tax planner who suggested we max out our traditional 401k contributions instead of Roth. At your income level, the tax deduction from traditional contributions could significantly reduce your tax bill. Since you're already doing a Roth 403b, you might want to consider switching some or all of those contributions to traditional pre-tax instead. For example, if your husband switched his $5,700 Roth contribution to traditional, that would reduce your taxable income by $5,700, potentially saving you $1,300+ in taxes depending on your marginal rate. Also look into an HSA if you have a high-deductible health plan. It's triple tax advantaged and can reduce your current tax bill.

Just my two cents - the W-4 calculator on the IRS website is total garbage for two-income households!!! I tried using it twice and still ended up owing. What finally worked for me was putting "married but withhold at higher single rate" on both our W-4s AND adding additional withholding. Basically the IRS assumes your household has just one income when you select "married" which is so outdated. U might also wanna check if either of ur employers has a tax benefit program. My company offers free tax planning sessions with a CPA twice a year and it helped us a ton with this exact problem.