Why do I owe money on my taxes?


Quick Answer

Individuals who owe the IRS money on their taxes more than likely didn't pay enough during the tax year, according to TurboTax. To avoid owing money in the future, taxpayers can make adjustments to their W-4 forms with their employers to increase the amount withheld from future checks.

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Full Answer

Allowances on a W-4 form dictate how much money individuals have withheld from their checks, as noted by TurboTax. Every allowance decreases the amount taxed on an individual's taxable income. In the event that taxpayers report more allowances than dependants, they increase the likelihood of owing money at the end of the tax year.

There is a W-4 calculator that can help individuals determine how much they need to have withheld from their checks in order to avoid owing money to the IRS. The W-4 calculator is also useful for helping employees receive more on their future checks and receiving bigger tax refunds, according to TurboTax.

Individuals who are self-employed have to make at least four estimated tax payments throughout the year in order to avoid having to make a single large payment at the end of the tax year. Should they fail to make these payments, the IRS can charge them interest, fees and penalties, according to TurboTax.

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