Always Owe at Tax Time? W-2 Earners: Here’s How to Fix Your W-4
By AI Tax Consulting PLLC | Serving Stafford, Fredericksburg & Virginia’s Working Professionals
Tired of owing taxes every April even though you have a full-time job?
If you’re a W-2 wage earner — especially married with more than one job between you and your spouse — the problem may not be your income. It’s likely your Form W-4 withholding setup.
Form W-4 tells your employer how much federal tax to take out of each paycheck. But most employees don’t complete it correctly, leading to under-withholding, unexpected tax bills, and even IRS underpayment penalties.
⚠️ Why You Keep Owing at Tax Time (Even as a W-2 Employee)
Here are the most common reasons:
1. Both spouses file W-4s separately but claim the same dependents
- Example: Each spouse claims 2 kids on their W-4 thinking it will balance out
- Result: The IRS sees 4 kids total — but you only have 2
- Outcome: Not enough tax withheld, large balance due
2. You don’t follow the IRS guidance for multiple jobs
- Form W-4 tells you to only claim dependents on one W-4
- Many people skip the instructions or guess
- The IRS Withholding Estimator is more accurate:
👉 Use the IRS Withholding Estimator
3. You rely on outdated tables or printed worksheets
- The tables in the W-4 instructions are often misunderstood
- They’re not always accurate for high-income or dual-income households
- Use the IRS tool instead or ask your CPA
4. You don’t account for other income
Even if you’re a W-2 employee, other income still creates tax liability:
- RSUs or stock compensation
- Capital gains from brokerage accounts
- Side 1099 income (freelancing, rental property, etc.)
- Unemployment income
- IRA or pension distributions
If this income isn’t reported through payroll, your withholding won’t cover the tax owed — and you’ll be hit with a surprise bill.
5. Your payroll departments don’t communicate
If you and your spouse both work, each employer only sees their own side. Neither employer sees your full household income, number of dependents, or tax strategy.
That means your withholdings aren’t being coordinated properly — which is especially risky under a Married Filing Jointly (MFJ) status.
6. You never updated your W-4 after life changes
- Marriage
- Divorce
- Having children
- Taking a second job
- Buying/selling property
- Earning bonuses or RSUs
Each of these changes affects your total tax liability — but unless you update your W-4, your employer won’t adjust your withholding.
🛠 How to Fix It: Smart W-4 Setup Tips
✅ Use the IRS Withholding Estimator:
👉 irs.gov/individuals/tax-withholding-estimator
✅ Download the latest Form W-4:
👉 Form W-4 and instructions here
✅ Only one spouse should claim the child-related credits
✅ Use Step 4(c) on Form W-4 to request additional tax withholding
✅ Review withholding any time you or your spouse changes jobs
✅ Account for other sources of income when calculating
📍 Real Talk: The IRS Doesn’t Care Who Made the Mistake
Even if your employer made a withholding error or you misunderstood the W-4, the IRS holds you responsible for the underpayment — and charges interest and penalties on balances due.
✅ Need Help Reviewing Your W-4?
At AI Tax Consulting PLLC, we help individuals and dual-income households in Stafford, Fredericksburg, and surrounding Virginia areas review their W-4 forms, estimate proper withholdings, and avoid IRS penalties — all with personalized, year-round support.
👉 Create your secure client account at portal.aitaxconsulting.com
📞 Call us at (703) 501-7090 📅 Book a Tax Appointment
