Why is my tax refund so much lower than last year despite similar income?
I'm totally confused about my taxes this year. Last April I started a new job that pays almost exactly the same as my previous position, but my federal refund for 2024 came in at less than half of what I got last year. It's a huge difference that I wasn't expecting at all! I thought I filled out all the new hire tax paperwork correctly when I started, but now I'm second-guessing myself. I went back and checked my ADP withholding information for federal taxes and noticed I'm listed as "single" and all the amounts are blank. There wasn't even an allowance area where I could claim "0" like I used to do at previous jobs. My company's HR department is practically useless when I've tried to ask questions. They just refer me to some generic website that doesn't answer my specific situation. Do I actually need to manually calculate an amount to be withheld from each paycheck? With my previous employers, I was always able to claim "0" allowances for federal withholding so the maximum tax would be taken out. I'm seriously worried I messed something up and don't want to keep getting smaller refunds going forward.
18 comments
Join the conversation
Freya Andersen
The difference in your refund is likely due to changes in how withholding is calculated now. The W-4 form was completely redesigned in 2020, and it no longer uses allowances (the "0" you were used to claiming). Instead, it uses a more direct approach where you provide specific information about multiple jobs, dependents, and other income. When you left the amounts blank on your new W-4, you were essentially accepting the standard withholding for a single person with one job and no adjustments. This might not withhold as much as claiming "0" allowances did under the old system. You don't need to manually calculate amounts yourself, but you do need to fill out the W-4 strategically. If you want more money withheld (to get a larger refund), you can add an extra withholding amount on Line 4(c) of the W-4. For example, if you want an additional $50 withheld from each paycheck, you'd put that amount there.
0 coins
Omar Zaki
•Thanks for explaining! So basically the W-4 redesign is why the refund dropped so much? Is there any way to figure out how much extra I should put on that Line 4(c) to get back to my previous refund level? And do I need to submit a new W-4 to my employer right away or wait until next year?
0 coins
Freya Andersen
•Yes, the W-4 redesign is very likely why your refund was so different. The old system with allowances often resulted in more overwithholding for many people. To calculate how much extra to withhold, take the difference between last year's refund and this year's refund, then divide by the number of pay periods remaining in the year. For example, if you got $2,000 less and have 18 pay periods left, you'd put about $111 extra per paycheck on line 4(c). You can submit a new W-4 to your employer at any time - the sooner you do it, the sooner the changes will take effect. Just ask your HR department for a new form or download it from the IRS website.
0 coins
CosmicCrusader
I was in almost exactly the same situation last year and found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out where the discrepancy was coming from. You upload your tax docs and it analyzes everything - it actually showed me that my withholding had changed significantly because of the W-4 changes others mentioned. What I really liked was that it compared my last two years of returns side-by-side and highlighted exactly where the differences were. In my case, it wasn't just the withholding but also some credits that had changed. The analysis explained everything in plain English instead of tax jargon.
0 coins
Chloe Robinson
•How does the document upload process work? I'm always sketchy about uploading my tax documents to websites I'm not familiar with. Do they store your information forever?
0 coins
Diego Flores
•Sounds interesting but also kinda like an ad lol. Does it actually tell you how to fix the problem or just point out what's wrong? And how much does this service cost?
0 coins
CosmicCrusader
•The document upload is super secure - they use the same encryption as banks. You can upload PDFs of your tax returns or even screenshots, and they don't permanently store your documents. They delete them after analysis. It doesn't just identify problems but provides specific recommendations. In my case, it suggested exactly how much extra withholding to add on line 4(c) of my W-4. It also identified a credit I qualified for that I had missed. I don't remember the exact pricing, but I thought it was reasonable for the peace of mind and specific guidance it provided.
0 coins
Diego Flores
Just wanted to update about taxr.ai since I was skeptical in my earlier comment. I decided to try it anyway and wow, it was actually super helpful! I uploaded my last two years of returns and it immediately showed me that my withholding had dropped by $175 per month compared to my previous job. The analysis pinpointed that my new employer was using the updated W-4 calculations but I hadn't filled out the form to account for my specific situation. The tool recommended I add $180 extra withholding per month on line 4(c) to get back to my previous refund amount. I took the recommendation to my HR department yesterday and they helped me update my W-4. Way easier than I expected and now I feel better knowing I won't be shocked again next tax season!
0 coins
Anastasia Kozlov
If your HR department is useless (mine was too), you might want to try Claimyr (https://claimyr.com) to speak directly with an IRS agent about your withholding situation. I spent weeks trying to figure out the right withholding amount after a job change, and my calculations were still off. I was super skeptical at first, but Claimyr actually got me connected to an IRS representative in about 15 minutes when I had been trying for days on my own. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent walked me through exactly how to calculate the right withholding amount based on my specific situation.
0 coins
Sean Flanagan
•Wait, how does this even work? I thought it was impossible to get through to the IRS. Are you saying this service somehow gets you to the front of the phone queue? That seems too good to be true.
0 coins
Zara Mirza
•Yeah right. Like some random service can magically get through to the IRS when millions of people can't. I've tried calling the IRS like 20 times this year and just get disconnected. If this actually worked, everyone would be using it. Sounds like a scam to me.
0 coins
Anastasia Kozlov
•It uses a system that continuously redials and navigates the IRS phone tree until it gets through, then it calls you to connect. It's basically doing the frustrating part for you. The technology is pretty straightforward - it's just automating what you'd do manually but more efficiently. No, it's definitely not a scam. I was super skeptical too, which is why I shared the video link so you can see exactly how it works. I was honestly shocked when they called me back and I was actually talking to a real IRS agent. The agent I spoke with explained exactly how the new W-4 calculations work and helped me figure out the right amount to put on line 4(c).
0 coins
Zara Mirza
I need to eat some humble pie here. After posting my skeptical comment about Claimyr yesterday, I was still desperate for help with my withholding issue so I decided to try it anyway. Not expecting much, honestly. Well, I was completely wrong. After spending weeks trying to get through to the IRS with no luck, Claimyr had me talking to an actual IRS representative in about 20 minutes. The agent explained that the W-4 changes from 2020 were causing my withholding issues and walked me through exactly how much extra I should request on line 4(c). The agent even explained that my situation was common - a lot of people who changed jobs in the last few years and went from the old W-4 system to the new one without specific adjustments are seeing smaller refunds. Saved me so much time and frustration.
0 coins
NebulaNinja
Another potential issue - double check if you're contributing the same amount to retirement accounts at your new job. When I changed jobs, I didn't realize the default 401k contribution was lower at my new company. This meant more of my income was taxable, which reduced my refund significantly. Took me months to figure out why my refund was so different!
0 coins
Luca Russo
•That's a really good point! Also, check if you're getting the same pre-tax deductions for health insurance and FSA/HSA contributions. My refund was way different one year because my new employer's health plan was $150/month cheaper, which meant $1800 more taxable income that year.
0 coins
NebulaNinja
•Yes, health insurance premiums are definitely something to check too! In my case, my premium went from $220 pre-tax at my old job to $180 at the new one, which added about $480 in taxable income for the year. Another thing I discovered was that my old job had automatically enrolled me in commuter benefits that took about $100/month pre-tax, and my new job didn't have that program. Small differences like these can really add up and affect your withholding and final tax bill.
0 coins
Nia Wilson
Did your old job give you any bonuses or have overtime? I had the same issue last year and it turned out my previous tax return included a $2000 bonus and about 50 hours of overtime that had higher withholding rates. My new job pays the same base salary but without those extras, my refund was way smaller.
0 coins
Ravi Patel
•You know what, this might be part of it too! My previous job did include some overtime during our busy season, maybe 3-4 hours a week for about 2 months. My new position is strictly 40 hours. That combined with the W-4 changes everyone mentioned probably explains the difference. Thanks for pointing this out - I hadn't even considered the overtime factor.
0 coins