Beginning in 2018, dependent exemptions are no longer taken as a deduction from your income.
Video transcript:
Wondering why you owe money on your tax return? This TurboTax Tip will break it down for you.
If you owe taxes after filing your return, it’s likely because you paid less tax during the year than you owed for your income level.
A common reason people owe taxes is because not enough income tax was withheld from each paycheck. If you’re employed, the IRS requires your employer to withhold a portion of your salary to pay your federal income taxes.
The amount withheld depends on a number of factors— such as your filing status, how many children you have, your spouse’s employment status, other sources of income, and more.
However, you do have some control over how much is taken out each pay period. The W-4 form you filled out when you started your job dictates how much tax is withheld from your paychecks.
You can fill out a new W-4 form any time to adjust your withholding. If you increase the amount, you can avoid a big tax bill, or even get a tax refund when you file.
You can also use the W-4 form to withhold taxes on other types of income, like interest from a high-yield savings account, stock dividends payments, or side gigs.
Or you can have your employer withhold a specific amount of additional tax – say, an extra $25 – from each paycheck. On the flip side, if you paid too much tax during the year, you can also submit a new W-4 form to reduce your withholding.
You’ll get a smaller refund (or no refund), but your paychecks will be larger. If you’re not sure how much tax should be withheld from each paycheck, you can test different scenarios using TurboTax’s
W-4 Calculator by following the link in this video’s description.
This can help you get the outcome you want next year—whether it’s a big tax refund or more money in your paycheck week to week. For non-wage income, like interest, dividends, or self-employment income, you can make estimated tax payments throughout the year to the IRS instead of having your employer withhold taxes.
If you don’t pay any income tax until you file your tax return—you’ll have no choice but to make one large tax payment by April 15. One final point: The IRS may charge a penalty if you fail to pay enough tax through withholding and/or estimated payments during the year.
However, most people won’t be penalized if either, one, they owe less than $1,000 in taxes, or, two, they paid at least 90% of the taxes due for the current year or 100% of the taxes owed on their return for the previous year, whichever is smaller.
Whether you rely on withholding or make estimated tax payments throughout the year, TurboTax will guide you through the process, ensuring you get the tax breaks you deserve. Visit
turbotax.com for more info to help you file your taxes with confidence!
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