Why do I owe underpaid taxes even though there have been no changes in filing status, deductions, capital gains, or withholdings?
Asked 4 years ago
Why do I owe 6k underpaid taxes? I only got 69k hazard pay due to working a lot of overtime In 2019 I made about 75k. In 2020 I made about 144k. Same job, same position, the same base rate of pay. I just worked a lot of overtime with hazard pay. I did not have any changes in my filing status or dependents. I've had pretty much the same deductions, no capital gains, and I didn't change my withholding. After doing this year's taxes, it shows that I owe almost 6k in underpaid taxes. My question is, why? I know I made a lot more, but shouldn't my employer have withheld whatever %, and it all evens out in the end? I'm going to have a tax professional review this, but in preparation for 2021 which I anticipate making more than 2019 but less than 2020. Should I tell my job to withhold more? How do I figure out how much?
Andia Rispah Igobwa
Friday, June 11, 2021
You made a mistake using an HR Block instead of a CPA who understands your line of work and relevant tax guidelines.
If you’re using HR Block, then you might as well be using Turbo Tax, ultimately responsible.
If you haven't set up sufficient withholding tax through your employer or fail to do it, you’ll be responsible for making estimated tax payments during the year.
If you don't make the quarterly payments, then you’ll have an underpayment penalty, but very small.
So yes, tell your employer to withhold more.
You’ll file a new W-4 form with payroll. IMHO automatic tax withholding is less painful than having to send the IRS $ at tax time.
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