Our HH tc is 470 and we have set every tax withholding to max but still we owe this much, I wonder if we are missing something? #tax
Did you sell any stock and if so how much?
Not much.. about 10k
RSU
Can you please send explain how rsu tax works? If you get 50k a year of stocks, I thought you will be taxed as income (they will take directly from your stocks) and then taxed If you sell.
RSUs count as income the day they vest at whatever market value is. Counts the same way as cash would. They withhold from that value some amount same as cash income, but they withhold whole shares of stocks to do it instead (sold at market value). When you file taxes it’s all just cash income to the IRS. When you sell your RSUs, that’s a capital gain for the difference between price at vest and price at sale. That has no withholding since you are in charge of it. But thanks to the dumb “tax cuts” back in 2019 that changed the withholding tables for employers, everyone is withholding less than they should by default, so everyone “owes” taxes at the end of the year. “Owes” because taxes are always the same regardless of withholding, you pay taxes on total income no matter what and owing taxes just means you under withheld for the year but that’s not really a problem (other than maybe owing a small fine if you were way off). Everyone thinks they are paying less taxes because they have more in their paycheck, but that’s not how taxes work in America and that’s why they owe money at the end of the year.
Do you do supplemental tax withholding?
Or did you have a large realized capital gain?
Makes $470 and can’t figure out how to make estimated payments…
What you’re missing is supplemental holding due to your combined TC pushing you into a higher tax bracket. Go to IRS online W4 tool and figure out how much both of you need to withhold and update it with HR.
Can somebody share a good link which explains how to do estimated payments, how it works, to whom it applies etc? I can only find very general articles online almost if too scared to share/explain in details… (yes, I’m tax dumb).
https://www.irs.gov/individuals/tax-withholding-estimator Use this every year if you’re dual income.
Adjust your W4. There’s an additional withholding field you can use. Estimate your taxes towards the EOY and withhold any shortfall.
Did you calculate cost basis correctly? What did you use to do your taxes?
Turbo.. I think so
With that tax bill and your income, and plenty of time left, I'd go find a CPA to double check everything for me, and advise. Even if nothing changes, it's a negligible cost to you. Look for smaller firms or independent preparers (not H&R block) that are familiar with high income earners and RSU/ESPP.
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There is not a max withholding. You can set it as high as you want and or make quarterly estimated payments. Fix your w4.