Using round figures for 2025 taxes – I make $125k and my spouse makes $80k and combined, our taxable income (with everything else) is $250k. On my W2 for my employer, I specify married filing jointly. At the end of 2025, my federal withholding (without any extra withholding for question 4C) was only $7000. My spouse was around $8000. We claimed 2 dependents if that matters.
1) Why would this be happening given our salaries?
2) Combined we were only at $15k withheld, so we were way short of the $35k Fed tax due, and had to pay a $400 penalty.
3) Does the $35k owed for Federal sound right for a $250k taxable income? Google said yes. Someone I know who makes more than us combined say they didn't come near that $35k amount owed total.
4) If it is correct, my "fair share" is about 65% and spouse at 35%, so I should be withholding $23k and spouse $12k. Given the $23k target, I'm nowhere near that with the $7k withholding calculated by my W2 and had to add additional withholding $400+ per weekly paycheck this year, which again to the person I asked at work says is astronomical. They only had to add $50/wk.
Please help me understand what's right/wrong.
Federal – withholding way too low end of year
byu/rinrinh intax
Posted by rinrinh
4 Comments
>I specify married filing jointly
Great! And what do you put for the rest of the W4?
If the answer is “nothing,” THAT is the error.
>without any extra withholding for question 4C
^^^^^ THAT is the error.
Unless you specify otherwise, EACH job thinks it’s your ONLY income for the whole year. Combined. For both of you, total.
So, your job will withhold as if the first roughly $30k (MFJ standard deduction) is tax-free.
And if your spouse does the same thing, THAT job will ALSO will withhold as if the first roughly $30k (MFJ standard deduction) is tax-free.
Therein lies the problem. Now combined, your two jobs assume you have about $60k of tax free combined income, which is…. wrong.
And then do either or BOTH of you add dependents to your W-4 withholding settings? If so, then each job withholds even LESS, so you come up even shorter. If anyone sets up for withholding involving dependents, it should be the one with the higher paying job.
And never mind any ADDITIONAL income you have, outside of work. That’s also completely unaccounted for in your withholding.
The way to fix it is to go through the ENTIRE W-4 and setting up more withholding.
Alternatively, each spouse may use the “Single” setting on the W-4, which will withhold more because only the SINGLE standard deduction will be assumed for each.
Total federal tax of $35k on MFJ $250k with two children and full child tax credit seems pretty close.
Read the instructions for Step 2: https://www.irs.gov/pub/irs-pdf/fw4.pdf
You would not *believe* how many people totally ignore that section and end up in the exact situation you are in.
>I make $125k and my spouse makes $80k and combined, our taxable income (with everything else) is $250k.
Where’s the extra $45k of taxable income coming from?
The person you work with is either confused or has something hinky on their tax filings. Ignore what they are saying.
The 35k and the extra withholding needed make sense, yes, at that income level with 2 jobs.
When you think about it, of course the married filing joint w4 setting can’t be expected to withhold the right amount for a single OR dual income household. It’s just not possible at the 2 situations mean a very different effective tax rate.