This is a major downer. Somehow I managed to claim three exemptions on my pay checks rather then the actual amount which is just one. So when it became time to file I realized that due to those two extra exemptions I did not pay nearly enough tax.
Uncle Sam allows you to take as few or as many exemptions as you want throughout the year. You could take zero exemptions and pay lots of tax throughout the year, and get lots of it back when it came time to file. Exemptions allow you to reduce your income that would otherwise be taxed. The number of exemptions is usually the number of children or dependents that you provide for.
I did the opposite of this. I took more exemptions then I should have. My paychecks were larger and I enjoyed that immensely. Now the butcher’s bill is due, I owe enough money that I will have to dip into my emergency fund to pay my taxes, and still have money to live the rest of the month.
This did not hurt me last year because I only worked ½ of the year, and my Adjusted Gross Income (AGI) was very low, and even with all the exemptions I still got money back.
In closing, lesson learned I will go talk to my payroll guy this week and make sure that I pay enough tax throughout the year so that I will not run into this problem next year.
That is a bummer!