Here’s Why More People Than Ever Are Owing Taxes This Year
Tax season is officially in full swing and if you have yet to start your taxes yet, you may be in for a big surprise this year…
More people than ever are owing taxes this year rather than receiving refunds and it’s coming with quite the shock.
Imagine heading into the new year expecting to receive a hefty refund only to find out that you actually owe taxes instead of receiving a refund.
It’s like the gut punch you didn’t see coming.
And while each person’s taxes are different, there may be several reasons as to why you’ll owe the IRS this year rather than expecting a refund.
Reasons Why You Owe Taxes in 2024
Owing taxes is daunting but there are several reasons this may be the case for you for the first time ever.
- You received an increase in pay such as a bonus, raise, etc.
- You changed jobs
- You didn’t complete your W4 withholdings correctly
- You made money from a side hustle
- You collected unemployment
- You sold stock or cryptocurrency
- You cashed out your 401K or other retirement accounts
- Had a big life change – had a baby, got married, had a job change or even had a dependent turn 17
- You paid off a student loan or mortgage (meaning the interest could no longer be claimed)
- You are no longer a student
It’s also worth noting that the 2021 child tax credit that was around $3,000 ended resulting in a $1,000 tax credit loss for parents per child.
Now, if you don’t believe you had any of these changes or events happen to you, it’s always worth double checking especially your W4 and see what your exemptions are.
Most online are discussing how the new W4 form is confusing and caused them to not claim the right amount of exemptions correctly causing them to underpay taxes on their paychecks.
“There are a few reasons taxpayers might owe federal taxes instead of getting a refund,” Mark Steber, chief tax information officer for Jackson Hewitt Tax Services, tells Nexstar. That includes withholding too little on your W-4, your income changing, contributions to your FSA or HSA changing, or withdrawing from your retirement account.
Many also made more money in 2023 than they ever have before but didn’t feel like they did because of the high cost of inflation.
If you truly believe you shouldn’t owe, it’s always worth hiring a tax professional to double check everything. A lot of time, there could be things you miss using those free online tax filing softwares.
There are even reports of people saying they are getting different numbers of refunds or taxes due based on the different tax filing softwares they are using.
