I found out from my tax guy that for the entire last year I have been working at my job (started April 2025,) that I have not been withholding enough funds for federal taxes. I need to be withholding around 12% from each check, but am currently only withholding about 2%.
A few factors: this is the first year that I am married and filing jointly with my wife, (I make ~$36k while she makes ~$65k.) We have no dependants and I didn't specify any additional deductions. I double checked my W4 with my employer and it seems like I filled (almost) everything out correctly.
I say almost everything because upon doing some research, I came to the conclusion that I messed up by not checking box 2C on page one of the W4. Upon submitting an updated W4 with 2C checked it seems like the amount taken out for federal taxes jumped to ~6%, but that's the only half of what I need to be paying.
What could I be missing? Thank you in advance.
Cannot figure out why I am under-withholding federal taxes
byu/W3aveworld intax
Posted by W3aveworld
3 Comments
You are incorrect that 12% “should” be withheld from your pay.
If you choose the withholding method that allocates half of the married standard deduction and tax brackets to each job, then 6% is about right.
If you want to use the method where your spouse claims the full standard deduction and tax brackets, and you withhold at your full marginal rate, then you would need to pick a different w4 setting than you picked.
Short answer: one or both of you put MFJ on your W-4 and then skipped or missed Step 2 where it asks about multiple jobs in the home.
When you complete your W-4 for a job, the payroll system assumes that this is the only paycheck in the house. It applies the entire MFJ standard deduction to your pay before calculating withholding.
But if your spouse also works, their payroll system is doing the same thing for *their* pay.
What ends up happening is that you have two standard deductions applied to the pay, but you can only claim one on the tax return.
The easy fix is for each of you to select Married Filing Separately on the W-4. You can still file a Joint return, but selecting MFS forces half of the MFJ standard deduction to be applied to each of your respective paychecks.
Are you and your wife doubling up on child tax credits? Only one of you should have them or at least one per child.