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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My status changed from married with three dependents to unmarried

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My status changed from married with three dependents to unmarried with two dependents, but this went (mistakenly) unreported for a year and now I'm told that I must pay the IRS $7700. The withholding for the year based on previous status was $4200. Does the added payment make sense?

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



Customer: replied 7 years ago.
Oh, of course, if it's the IRS and not must the pension board, I owe more. I see that. And yes, I receive other income. Total income came to $74,747. Do I understand correctly, that withholding already paid issubtracted from the revised withholding (based on adjusted status)? My S.S. income was $17,465 and the taxable number, if I'm understanding what I'm reading, is $14,845. I'm questioning why I need to pay IRS $7700 if I've already paid $4,200.

Hello again 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.



Thank you JA





Customer: replied 7 years ago.
Thanks. You're very kind to plow through my inadequate bookkeeping numbers. I'm back to my original question - what my updated pension check will be. The $7700 figure was the TOTAL for all my income. Just sticking with the pension numbers of approx. $3,500/mo and having $4,200 already withheld in '09 based on married with three dependents, given now umarried status and only two dependents, what will be withheld from the monthly pension of $3,500?

Hello again JA,


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.



Thank you JA



Customer: replied 7 years ago.
You're right. I had an additional income of some $20,000 beyond the pension. But it's not true that no other deductions were made. S.S. took a deduction. So I'm assuming that my IRS debt of $7700 is based on inaccurately reported status of married with two dependents. Even so, I think $7.700 in addition to withholding on SS and pension is out of whack. But I'll stop blathering about this if you think the IRS debt is not out of whack. (And I won't quote you if you. Not to worry). Meanwhile, thanks for the great help with estimate of reduced amount.

Hello again JA,


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.



Thanks JA



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