Many taxpayers expect to receive a refund when filing their federal tax return, only to be surprised by a tax bill instead. This outcome often feels frustrating and confusing, especially when you thought you had been paying enough throughout the year. Whether this is your first time owing taxes or it has become a recurring issue, it’s important to understand why this happens.
Owing taxes doesn’t necessarily mean you did something wrong. It often results from changes in income, personal life circumstances, or inadequate planning. Understanding the most common causes of underpayment can help you take better control of your financial situation and avoid unpleasant surprises in the future.
Under-withholding from your paycheck
One of the most common reasons people owe taxes is that they haven’t had enough withheld from their paychecks during the year. The federal tax withholding system is designed to estimate how much you owe for the year and deduct that amount gradually from each paycheck. However, this system only works well if your withholding accurately reflects your financial situation.
If you started a new job and didn’t properly complete your withholding form, or if you had changes in your dependents or filing status but didn’t update your form, the amount withheld may be too low. This means you’re essentially underpaying your taxes during the year, and the unpaid balance will be due when you file.
Updating your withholding form whenever your circumstances change is one of the best ways to avoid this issue. Many taxpayers make the mistake of assuming their employer or payroll system will automatically adjust for life changes, but that is not the case. The responsibility lies with the employee.
Earning additional income without withholding
Another major factor that leads to tax bills is earning extra income that isn’t subject to withholding. This includes income from freelance work, investments, side jobs, rental property, and unemployment benefits. Since taxes aren’t automatically deducted from these earnings, it’s up to the taxpayer to set aside money or make estimated payments to cover the eventual tax liability.
If you cashed out a stock portfolio, worked as an independent contractor, or received rental income without planning for the taxes on that income, the result is often a higher balance due when you file. Even small amounts of extra income can push you into a higher tax bracket or reduce your eligibility for certain credits, increasing your overall tax burden.
Unemployment compensation, which many people assume is tax-free, is also taxable income. Without voluntary withholding, these payments can significantly affect your tax situation. Planning ahead and requesting withholding or making estimated payments can help you avoid a future surprise.
Self-employment tax obligations
If you are self-employed, even part-time, you may owe self-employment tax in addition to income tax. When you work for an employer, they handle withholding for Social Security and Medicare taxes. As a self-employed person, you are responsible for paying both the employer and employee portions of these taxes yourself.
The self-employment tax rate is higher than most people expect, and many are caught off guard by how much they owe when they calculate their total liability. Even if your business income is modest, you may still owe hundreds or even thousands of dollars in self-employment taxes.
This issue is especially common among gig economy workers, small business owners, and freelancers who receive 1099 forms instead of traditional W-2s. Because there’s no automatic withholding, it’s critical to estimate your taxes throughout the year and pay quarterly if necessary.
Difficulty making quarterly estimated tax payments
Taxpayers who earn income not subject to withholding are generally expected to make quarterly estimated tax payments. This system allows you to pay your taxes as you go, rather than all at once at the end of the year. However, for many people, this is easier said than done.
Unexpected expenses, fluctuating income, and lack of financial discipline often make it difficult to stick to a quarterly payment plan. If you miss one or more of these payments, you may not only owe taxes but also face penalties and interest for underpayment.
Many self-employed individuals and investors find it hard to keep up with estimated payments, particularly when their income varies widely. The best approach is to calculate your net income on a quarterly basis and determine how much to set aside. Creating a separate savings account for taxes can also make it easier to manage these payments consistently.
Life events that affect your taxes
Life changes can significantly affect your tax situation, often in ways that are not immediately obvious. Major events such as marriage, divorce, having a child, adopting a child, or a dependent aging out of eligibility can all alter your taxable income, filing status, and eligibility for credits and deductions.
For example, a couple who recently got married may find themselves in a different tax bracket, especially if both spouses have substantial income. In contrast, a parent whose child turned 18 and is no longer eligible as a dependent may lose valuable tax credits and deductions.
Other events, like starting or losing a job, retiring, or receiving a large inheritance, can also impact your tax picture. Failing to adjust your withholding or estimated payments to reflect these changes can result in an unexpected tax bill.
Regularly reviewing your financial situation and how it aligns with your current tax withholding is essential. This ensures that your withholding accurately reflects your eligibility for credits, your filing status, and your income level.
Changes in tax laws or policies
Federal and state tax laws are subject to frequent changes, and these updates can affect how much you owe. New tax laws can alter tax brackets, standard deductions, credits, and phase-out thresholds. If you are not aware of these changes or fail to adjust your tax planning accordingly, you could find yourself owing more than expected.
For example, if a deduction or credit you previously qualified for has been reduced or eliminated, or if income thresholds for certain benefits have changed, your tax liability could increase. Similarly, temporary relief measures—such as those passed during a national crisis or economic downturn—may expire, and those benefits will no longer be available in future tax years.
Keeping up with tax changes may feel daunting, but it is necessary for accurate financial planning. Reviewing annual updates from trusted sources and consulting a tax professional when needed can help you stay informed and avoid unintentional underpayment.
Working multiple jobs
Having more than one job can complicate your tax situation, particularly if each employer is unaware of your total income. When you work multiple jobs, each employer withholds taxes based only on what they pay you, which may not be sufficient when added together.
The result is often too little withheld overall, leading to a tax bill when you file. This situation is common among people who hold part-time jobs, seasonal work, or gig economy positions in addition to a full-time job.
To address this, you can update your withholding form to account for income from other jobs or use tax planning tools to calculate your combined income and appropriate withholding amount. You can then instruct one employer to withhold a higher amount to cover the difference.
Receiving retirement income
For retirees, it’s a common misconception that all retirement income is tax-free. In reality, distributions from traditional retirement accounts, pensions, and even part of your Social Security income may be taxable. Without the proper withholding setup, retirees can end up owing taxes at the end of the year.
The amount of tax owed depends on your total income, including any part-time work, rental income, or investment earnings. If you begin taking required minimum distributions and haven’t opted into withholding, you could be accumulating an unpaid tax liability throughout the year.
Filing the appropriate tax forms and requesting withholding on pension and annuity distributions can help prevent this issue. It’s also wise to review your estimated income annually and make any necessary adjustments.
Misclassification as an independent contractor
Sometimes employers classify workers as independent contractors instead of employees. If this happens, you will receive a 1099 form instead of a W-2, and no taxes will be withheld from your pay. While this arrangement can offer flexibility, it also means you’re responsible for paying both income and self-employment taxes.
This situation often affects rideshare drivers, delivery workers, consultants, and others in the gig economy. If you are misclassified and unaware of your tax responsibilities, you may owe a significant amount when you file your return.
If you believe you’ve been misclassified, you can seek clarification from your employer or file a form with the IRS to request a determination. Regardless, if you receive income as a contractor, you should set aside funds for tax and consider making estimated payments.
Changes in deductions and credits
Many taxpayers rely on deductions and credits to reduce their tax liability. If you lose access to a major deduction or credit, the difference can dramatically increase your tax bill. This could occur because of income changes, filing status adjustments, or changes in the tax code.
For instance, if your income increases beyond certain thresholds, you may no longer qualify for the earned income credit, education credits, or child tax credits. Similarly, if you move to a state with different rules on deductions or property tax limitations, your overall tax liability may shift.
Being aware of income limits and staying updated on tax rule changes allows you to anticipate when you might lose a deduction or credit and plan accordingly.
Understanding the W-4 After Marriage
Marriage changes more than your living situation—it significantly impacts your financial and tax life. After saying “I do,” couples must adjust many aspects of their financial planning, and the W-4 form is one of the most critical. The IRS Form W-4 determines how much tax your employer withholds from your paycheck. Completing it accurately can help you avoid unexpected tax bills or large refunds during tax season.
Why Updating the W-4 Is Essential After Marriage
Preventing Underpayment or Overpayment
When two incomes combine, your household income might move into a higher tax bracket. If both spouses continue to withhold based on single or separate income levels, there’s a risk of under-withholding. On the flip side, withholding too much can mean less take-home pay throughout the year, which could be better used for savings, debt repayment, or joint investments.
Adjusting for New Financial Realities
Your expenses, savings goals, and even your health insurance or retirement plans may change after marriage. The W-4 form allows for adjustments that can reflect your new circumstances. For instance, you may want to increase or decrease withholding depending on your spouse’s income and your combined deductions.
Legal Obligations and IRS Expectations
From the IRS’s point of view, it’s your responsibility to ensure accurate tax withholding. Failing to do so could result in penalties or interest. That’s why the IRS recommends reviewing and updating your W-4 whenever a major life event occurs—including marriage.
Step-by-Step Walkthrough of Filling Out the W-4 After Marriage
Step 1: Provide Your Personal Information
This section remains straightforward. Enter your full name, Social Security number, and address. Be sure to check the box for “Married filing jointly” if that will be your tax status.
Step 2: Indicate Multiple Jobs or a Working Spouse
This section is especially important for newlyweds. If both spouses work, you have three options to calculate your total tax liability:
- Use the IRS Tax Withholding Estimator online
- Use the Multiple Jobs Worksheet attached to the W-4
- Check the box in Step 2(c) for both spouses if there are only two jobs in total, and they pay roughly the same
Remember, checking the box in Step 2(c) increases withholding to account for both incomes. It’s the simplest method for many couples but may result in slightly higher withholding.
Step 3: Claim Dependents
If you have children or other qualifying dependents, list them here. You can claim up to $2,000 per child and $500 for other dependents. This reduces your withholding amount and may increase your paycheck. If you and your spouse both work, only one of you should claim dependents to avoid doubling up and under-withholding.
Step 4: Other Adjustments
Here, you can fine-tune your withholding by accounting for:
- Additional income not subject to withholding, such as interest or dividends
- Itemized deductions greater than the standard deduction
- Any extra amount you want withheld from each paycheck
If you plan to itemize deductions as a couple, such as mortgage interest or charitable contributions, estimate them carefully to reflect your tax situation accurately.
Step 5: Sign and Submit
After reviewing your entries, sign and date the form. Submit it to your employer, not the IRS. Most employers allow you to update your W-4 through their HR or payroll systems.
Common W-4 Scenarios for Married Couples
One Spouse Working
If only one person in the marriage works, filling out the W-4 is relatively simple. You can generally claim the full standard deduction and any dependents without worrying about coordinating with a spouse’s employer. However, you may still want to add extra withholding if your spouse has substantial income from other sources.
Both Spouses Working
This is the most common scenario and requires more coordination. Couples should:
- Decide who will claim dependents
- Coordinate Step 2 (multiple jobs) so it’s only applied once
- Use the IRS estimator for a more precise calculation
Communication is key to avoiding duplicate entries or conflicting information.
Freelance or Gig Work
If one or both spouses have freelance income, you can still use the W-4 to withhold extra tax through your job to cover this additional income. Alternatively, consider making estimated tax payments directly to the IRS each quarter.
High-Income Couples
High-income earners may face additional taxes, such as the Net Investment Income Tax or the Additional Medicare Tax. It’s wise to consult a tax professional in these situations and possibly adjust withholding accordingly in Step 4(c).
Strategic Considerations for Married Couples
Choosing the Right Filing Status
Most couples file jointly because it usually results in a lower tax bill. However, there are instances where “Married Filing Separately” may be beneficial, especially when one spouse has significant medical expenses or student loan repayment considerations. Your filing status directly affects your W-4 entries, so make this decision first.
Coordinating Withholding Strategies
Couples can use different strategies depending on their goals:
- Even split approach: Each spouse withholds approximately half the total estimated tax liability
- Primary earner approach: One spouse covers most or all of the tax liability through their job withholding
- Blended approach: Both spouses withhold, but the amounts are tailored based on income levels
No method is universally correct—it depends on your cash flow preferences and tax situation.
Taking Advantage of Deductions and Credits
Marriage opens the door to a range of new deductions and credits, including:
- Earned Income Tax Credit (EITC), depending on income level
- Child Tax Credit for couples with kids
- Education credits if either spouse is in school
- Retirement savings contributions credit
Understanding how these apply to your situation will help you adjust withholding accurately and avoid over- or under-payment.
Mistakes to Avoid When Filling Out the W-4 After Marriage
Not Updating Your Form at All
Many couples forget to revisit their W-4 after marriage, assuming their employer will handle it automatically. However, withholding doesn’t adjust itself unless you submit a new form.
Both Spouses Claiming the Same Dependents
Only one spouse should claim each dependent. Duplicating this can significantly skew your withholding and result in a tax bill during filing season.
Misjudging the Impact of a Second Job
Adding another income stream often pushes couples into a higher bracket, even if each job alone doesn’t. Make sure both of you factor in all income when calculating your combined withholding needs.
Using the Same Withholding Allowances as When Single
Don’t assume that what worked before marriage will work now. The tax structure for married couples—especially with dual incomes—is different. Using pre-marriage figures often leads to unexpected tax issues.
Using Withholding to Meet Financial Goals
Planning for a Refund vs. Maximizing Take-Home Pay
Some couples prefer to receive a large refund as a form of forced savings. Others want to keep as much of their paycheck as possible. Your W-4 is the tool for adjusting this balance:
- To aim for a larger refund, increase withholding
- To maximize take-home pay, reduce withholding carefully
Budgeting for Estimated Taxes
If either spouse is self-employed, your W-4 can act as a balancing mechanism. Adding extra withholding through an employer job can reduce or eliminate the need for quarterly estimated tax payments.
Aligning With Financial Milestones
You can strategically adjust withholding as you plan for major life events:
- Buying a home
- Starting a family
- Launching a business
- Paying off debt faster
Each of these may affect your tax deductions and financial obligations, so it’s smart to align your W-4 accordingly.
IRS Tools and Worksheets for Support
The IRS provides several resources to help married couples navigate their W-4s more confidently:
- IRS Tax Withholding Estimator: An online tool to estimate your tax liability and optimal withholding
- Multiple Jobs Worksheet: A paper-based method for calculating withholding when both spouses work
- Deductions Worksheet: Helps you estimate itemized deductions to complete Step 4(b) accurately
Using these tools reduces the guesswork and gives you a more personalized withholding strategy.
When to Review Your W-4 Again
Your tax situation doesn’t end with marriage. You should review your W-4 annually or when these events occur:
- A new job for either spouse
- A job loss or change in income
- Birth or adoption of a child
- Purchase or sale of a home
- Significant changes in deductions or tax credits
Being proactive keeps you in control and avoids surprises at tax time.
Understanding Special W-4 Situations for Married Couples
After adjusting your W-4 for marriage, there may still be complex situations that affect your withholding. From dual-income households to multiple job scenarios and additional income sources, married taxpayers often face unique challenges that go beyond simply checking the “Married” box on the form. We’ll walk you through some of the most common and complex W-4 scenarios to help you fine-tune your withholding strategy.
Why Dual-Income Households Can Result in Underwithholding
One of the biggest surprises for newly married couples comes when both partners work. If both spouses complete a W-4 without coordinating with each other, the IRS may withhold less than what’s owed at tax time. This underwithholding happens because the tax tables on each W-4 assume that it’s your only job and income source.
For example, if both spouses earn similar salaries, combining incomes may push them into a higher tax bracket. Without adjusting for this, the default withholding may leave a shortfall at year-end.
Coordinating W-4 Forms as a Couple
The IRS recommends using only one W-4 for the highest-paying job to complete Step 2(c) (the checkbox for multiple jobs). The other spouse should skip Step 2. This helps prevent excessive or insufficient withholding.
Another method is using the IRS Tax Withholding Estimator. This tool allows both spouses to enter income data to determine appropriate adjustments and how to fill out Steps 3 and 4 on each W-4.
How to Handle Multiple Jobs in One Household
If you or your spouse has more than one job, your combined household income can become complex. Each W-4 form assumes that job is your only income, so total tax withheld could be far too low. You need to consider all sources of employment when deciding on adjustments.
Here are the three methods for adjusting W-4s when managing multiple jobs:
- Use the IRS estimator to compute the appropriate withholding.
- Check the multiple jobs box (Step 2(c)) if there are only two jobs in total.
- Use the worksheet on Page 3 of the W-4 form to manually calculate extra withholding amounts for Step 4(c).
When Only One Spouse Has Multiple Jobs
If only one spouse holds multiple jobs, that person’s W-4 will likely need adjustments to compensate for the extra income. The other spouse’s W-4 should generally reflect just their own income unless a significant tax imbalance is anticipated.
Managing Other Sources of Income
Self-Employment, Freelance, or Side Hustle Income
Many married couples boost their household income with freelance work, rental properties, or gig economy jobs. These sources often don’t have automatic withholding, so adjusting your W-4 can help offset future tax bills.
Use Step 4(a) on the W-4 form to report other income not subject to withholding. This ensures enough tax is withheld throughout the year, even if it doesn’t come from your primary employer.
Alternatively, you can estimate your annual side income and increase withholding on your main job via Step 4(c) instead of paying quarterly estimated taxes.
Investment or Retirement Income
If you or your spouse receives income from investments, retirement accounts, or other taxable sources, this also affects your tax liability. You can report this income in Step 4(a) or use the IRS estimator to incorporate it into your withholding plan.
Be aware that certain types of income, like qualified dividends and long-term capital gains, are taxed at different rates. These details are important when deciding whether to include them in your W-4 planning.
Child Tax Credits and Other Dependent Benefits
Step 3 and Claiming Dependents
One of the most beneficial aspects of the W-4 for married couples with children is Step 3. This section allows you to claim the Child Tax Credit and other dependent-related credits, which directly reduce the amount of tax withheld.
Married couples filing jointly with children under age 17 may be eligible for up to $2,000 per child, depending on income. This can significantly reduce your overall tax burden.
Coordinating Credit Claims Between Spouses
Only one spouse should claim dependent-related credits on their W-4, typically the one with the higher-paying job. Splitting the credit across both W-4 forms can cause over-adjustments and underwithholding.
However, if your combined income is close to or exceeds phaseout thresholds (starting at $400,000 for joint filers), you may need to reduce the amount claimed or not claim it at all, depending on your specific situation.
Adjusting Withholding for Deductions
Standard vs. Itemized Deductions
Step 4(b) of the W-4 allows for an adjustment if you expect to itemize deductions and they will exceed the standard deduction for married couples ($29,200 for 2025). Typical itemized deductions include:
- Mortgage interest
- Property taxes
- Charitable donations
- Medical expenses
- State and local taxes (up to $10,000)
If your total itemized deductions are higher than the standard deduction, reporting the difference in Step 4(b) will reduce the amount withheld from your paycheck.
How to Calculate Deduction Adjustments
Start by estimating your total deductible expenses for the year. Subtract the standard deduction amount. If the result is a positive number, enter it in Step 4(b) to reduce withholding.
If you’re unsure whether to itemize, try completing a Schedule A worksheet to get a better estimate or wait until year-end when more data is available.
Requesting Additional Withholding
When to Use Step 4(c)
If after completing the other steps, you still anticipate owing taxes, you can enter an extra dollar amount per pay period in Step 4(c). This method is useful if:
- You receive substantial untaxed income (e.g., freelance or rental).
- You’ve underpaid in previous years and want to avoid penalties.
- You’re close to income limits that impact tax credits or deductions.
Examples of When This Is Useful
Let’s say you and your spouse both earn a high income, and you’ve maxed out your dependent credits. If you anticipate an additional $3,000 tax bill at year-end, divide that amount by the number of pay periods left in the year and enter the result in Step 4(c). If you get paid biweekly and have 20 pay periods left, you’d enter $150 in Step 4(c).
IRS Withholding Estimator: Why and How to Use It
How the Estimator Helps Married Couples
The IRS Withholding Estimator is particularly useful for married couples because it allows you to:
- Enter both spouses’ incomes and jobs
- Include children and dependent credits
- Add investment or freelance income
- Forecast the impact of itemized deductions
This gives a more holistic view of your tax situation than a single W-4 can capture.
Updating W-4s Based on Estimator Results
Once you’ve completed the estimator, it provides instructions on how to update your W-4. These may include:
- Adjusting amounts in Step 4(a), (b), or (c)
- Claiming or removing dependent credits
- Using specific wording on Line 4(c) to reflect the suggested extra withholding
Make sure both spouses use the estimator and compare results so that your overall withholding is accurate across all jobs.
Filing Status Choices and Their Implications
Should You Always File Jointly?
While most married couples file jointly, it’s not always the best choice. Filing separately may make sense if:
- One spouse has large medical bills or unreimbursed business expenses
- You want to protect one spouse from liability for the other’s debts
- You have a complex financial situation that benefits from separate returns
However, filing separately often means losing eligibility for certain tax credits and a higher tax rate.
How Filing Status Affects W-4 Planning
If you file separately, you’ll each need to fill out a W-4 based on your individual income and deductions. You may not be eligible for the full Child Tax Credit or certain education credits, so your withholding needs to reflect this.
On the W-4, you may want to use the “Single” status instead of “Married filing separately” to have more tax withheld, especially if your tax bill tends to be higher.
Changing Withholding Mid-Year
When to Consider Updating Your W-4
It’s wise to revisit your W-4 after any of the following events:
- A spouse gets a new job
- A job is lost or hours are cut
- You start or stop a freelance gig
- You buy a home or refinance
- You have a child or adopt
- Your itemized deductions change significantly
There’s no limit to how often you can submit a new W-4, so adjust as needed to avoid year-end surprises.
Mid-Year Check-In Strategy
Use the IRS estimator in the middle of the year (around July or August) to check whether your withholding is on track. This gives you time to adjust and smooth out the impact over the remaining pay periods, rather than dealing with a large bill in April.
Planning Ahead for Future Tax Years
Using Past Returns to Inform Future Withholding
Review your last year’s tax return to understand how your marital status, dependents, and income affected your refund or balance due. Use this as a benchmark when filling out your W-4 each year.
If you owed more than $1,000 last year, you might need to make additional adjustments in the current year to avoid penalties.
Strategies for Avoiding Surprises
A good rule of thumb for many married couples is to aim for a small refund or balance due of less than $500. This helps avoid penalties and keeps more money in your paycheck throughout the year.
Some couples prefer to overwithhold slightly to ensure a refund, while others prioritize cash flow and prefer exact withholding.
Conclusion
Getting married is a joyful milestone, but it also introduces a range of financial changes that can significantly impact your tax situation. One of the first and most important steps to take is updating your W-4 form to reflect your new marital status and any changes to your household income. Whether you’re adjusting for dual incomes, claiming dependents, or simply trying to avoid underpayment or overpayment of taxes, properly filling out the W-4 is crucial to achieving greater financial control.
Throughout this guide, we’ve explored the nuts and bolts of the W-4 from understanding how the form works and how marriage affects tax brackets, to navigating the complex sections of Step 3 and Step 4, especially when dealing with multiple jobs or itemized deductions. We’ve also addressed key considerations like common mistakes to avoid, how to coordinate with your spouse, and how to update the form if your situation changes mid-year.
Ultimately, your W-4 is more than just a form, it’s a financial tool that helps you align your tax withholding with your actual liability. Taking the time to fill it out correctly after marriage means fewer surprises at tax time, better budgeting throughout the year, and peace of mind knowing you’ve taken a proactive step toward managing your new financial life together.
As your circumstances evolve whether you welcome children, buy a home, or change jobs revisit your W-4 periodically to make sure it still fits your needs. A well-managed W-4 is a cornerstone of good tax planning and a smart move for any newly married couple building a secure financial future.