Withheld too much income tax - Massive $20K refund seems wrong?

This definitely sounds like you're overwithholding significantly. A $22k refund means you're essentially giving the government an interest-free loan of your money throughout the year! The most common reasons for large overwithholding include: 1) Not updating your W4 after a major life change (marriage, spouse stopping work, etc.) 2) Both spouses using "Married" filing status on W4 without checking the "two jobs" box 3) Not accounting properly for multiple income sources 4) Claiming fewer dependents than you're entitled to Since you mentioned your spouse only made $60k last year, my guess is your withholding wasn't properly adjusted for two-income households. The IRS withholding calculator (https://www.irs.gov/individuals/tax-withholding-estimator) can help you figure out exactly what to put on your W4 forms to get closer to breaking even next year.

After struggling with a similar huge refund situation last year, I found taxr.ai (https://taxr.ai) super helpful for figuring out why I was overwithholding so much. I uploaded my W2s and pay stubs, and it showed me exactly where my withholding was off and how to fix it. The tool breaks down your tax situation in normal-people language instead of IRS-speak. What I learned was that my spouse and I were both withholding at the higher single rate even though we file jointly. Fixing that one thing reduced our withholding by almost $600 a month!

Just wanted to follow up about taxr.ai - I tried it after posting here and wow, it actually explained my withholding issue perfectly! Turns out my wife and I were both withholding at the "married but withhold at higher single rate" which was WAY too much for our situation. The tool showed us exactly what to put on our W4s and predicted we'll get within $500 of breaking even next year instead of the $14k refund we got this year. Super helpful for those of us who aren't tax experts!

If you want to talk to the actual IRS about your withholding (which I recommend), save yourself hours of hold time with Claimyr (https://claimyr.com). I used it last month when I had a similar withholding question and got through to a real IRS agent in about 15 minutes instead of the 2+ hours I'd spent trying before. They have a demo video here: https://youtu.be/_kiP6q8DX5c showing how it works. The IRS agent I spoke with actually helped me understand that both my wife and I were claiming "married" status without checking the "two jobs" box, which was causing massive overwithholding. One 10-minute conversation saved us about $450/month in unnecessary withholding!

Ok I'm eating crow here. After complaining about both services mentioned above, I broke down and tried Claimyr because my withholding issue was driving me crazy. IT ACTUALLY WORKS. Got a call back in about 40 minutes with an IRS agent on the line. She explained that my "Married Filing Jointly" withholding was way off because my wife and I have similar incomes, which throws off the standard withholding tables. The agent walked me through exactly what to put on my W4 Step 2(c) and we should be getting a much smaller refund next year. Just wanted to admit when I'm wrong - this service is legit.

Ok I'm eating crow here. After complaining about both services mentioned above, I broke down and tried Claimyr because my withholding issue was driving me crazy. IT ACTUALLY WORKS. Got a call back in about 40 minutes with an IRS agent on the line. She explained that my "Married Filing Jointly" withholding was way off because my wife and I have similar incomes, which throws off the standard withholding tables. The agent walked me through exactly what to put on my W4 Step 2(c) and we should be getting a much smaller refund next

Most likely issue is that you and your wife are both using "Married Filing Jointly" on your W4s but not accounting for two incomes. This is a super common mistake that leads to huge refunds. The W4 withholding tables assume that if you select "Married Filing Jointly," you're the only income earner or the primary one. When both spouses select this without adjusting for the dual income, you massively overwithhold. Check box 2(c) on your W4 where it says "If there are only two jobs total, you may check this box." Checking this will withhold at a higher rate to account for both incomes. Or use the Multiple Jobs Worksheet on page 2 of the W4.

Has anyone calculated how much money you lose by getting a huge refund like this? I mean $22k sitting with the IRS for a year instead of in your pocket is a serious opportunity cost.

The $22k refund is definitely a sign of significant overwithholding! Based on what you've shared, the most likely culprit is that both you and your spouse selected "Married Filing Jointly" on your W4s without accounting for having two incomes. Here's what probably happened: The withholding tables assume when you check "Married Filing Jointly" that you're the primary or only earner. When both spouses do this, you end up withholding as if each income is taxed at lower brackets, but when you file jointly, your combined income pushes you into higher tax brackets - creating a massive overwithholding situation. Quick fixes to try: 1. Both of you should check box 2(c) on new W4s ("If there are only two jobs total, you may check this box") 2. Stop that extra $175/paycheck your spouse is withholding 3. Consider using the IRS withholding estimator to fine-tune You'll want to submit updated W4s ASAP since you're essentially giving the government an interest-free loan on $22k. At current savings rates, that's nearly $1,000 in lost opportunity cost per year!