Have a Tax Question? Ask a Tax Expert
Hello again JA,
I am going by your previous post where you said your total income for the year was $54,450. Assuming that was your total income and you had no other income from Social Security or anything else, then if you filed as single with two dependents, the tax you owe for the year should have been around $6,544. If you had $4,200 withheld in tax, that means you would owe the IRS and additional $2,344.
If you really owe the IRS another $7,700, then you must have had more income than just the $54,450 you last told us that you had. If you also receive SS benefits, some of those benefits might also be taxable, so we would need the complete information of how much income you really had for the year.
Thank you JA
First of all, what you have withheld from your pension in taxes is just an estimate of what you think you may owe at the end of the year. You won't know your actual tax amount until you do your taxes.
But the biggest problem is that you said your total income was actually $74,747. So if your pension was only $54,450, then you had an additional $20,297 in income that I assume you had no taxes withheld from.
If your total income for the year was $74,747, if you filed as single with two dependents, you would owe tax of $11,619. If you only paid in $4,200, then you would owe an additional $7,419. These are just rough estimates, but it's close to what you say you are being asked to pay.
The problem is that first, you did not have enough withheld from your pension check because you were claiming married with 3 exemptions. The second problem is that you had additional income of $20,297, and you had no taxes withheld at all on that income.
You really need to start having taxes withheld from the additional income that you have, whether that be from SS or other sources. Otherwise you will end up owing again next year.
Your new withholding should be around $7,056 for the year, which means you would end up getting around $238 less per month from your pension checks.
Yes, I do think that the additional amount you owe is based on not changing your withholdings to single with 2 exemptions. That would mean you paid in $2,856 less then you should have on the pension income.
If you change your withholdings to single with two exemptions, then hopefully next year you will not run in to this same problem.