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I was actually looking forward to doing my taxes this year.
Money has been publishing stories for weeks about how people are receiving the biggest refunds in U.S. history thanks to the One Big Beautiful Bill Act, so I figured I had some money coming my way. I started dreaming about what I'd spend it on: concert tickets, new sneakers, maybe a vacation.
It was a crushing blow, then, when I filed the other day and learned that instead of getting money, I owed the IRS. Over $1,000.
This is unusual for me; I've always gotten at least a small refund. I don't know why I owed, much less in a year when the predominant storyline is about how much taxpayers are benefiting from the new law. But I am NOT going to let it happen again.
I unexpectedly owed money on my 2025 taxes. Why does this happen, and how can I fix it for next year?
Mark Steber, chief tax officer at Jackson Hewitt Tax Service, tells me my situation is pretty common. He says the One Big Beautiful Bill Act is a "feast and famine bill," meaning it tends to have extreme results: The legislation either puts a ton of money into my pocket or none.
The law includes several provisions aimed at bringing down costs for certain groups of people, like the deductions for tips and overtime and the "senior bonus." Those deductions have driven up the average tax refund to $3,571.
But the boost wasn't universal.
"If you got a $25,000 tip deduction, your refund [is] way up," Steber says. "A lot of people don't have tips, and their refunds are not up."
My issue was likely with my withholding. See, in the U.S., federal income taxes are pay-as-you-go. Workers like me have a certain amount of tax taken out — or withheld — from each paycheck; we owe the IRS money when that sum falls short of our liability (minus any credits).
Jason Stanfield, an associate professor at Ball State University and a member of the American Accounting Association, says workers get to determine their withholding when they file a Form W-4 with their employer. The W-4 asks questions about family size, multiple jobs and other income; employers use this information to figure out how much to withhold.
Issues commonly arise when a person experiences a life change — like getting married, having a baby, buying a house or closing a retirement account — and neglects to update their withholding accordingly. (Oops.)
Steber says side hustles can be tricky, too. When a person is self-employed, they're supposed to pay both halves of certain payroll taxes (totaling 12.4% for Social Security and 2.9% for Medicare). Self-employed taxpayers are generally on the hook for quarterly estimated payments.
If a person doesn't pay the IRS enough either via withholding or estimated payments, they end up owing a bunch of money — and possibly an underpayment penalty — come tax time.
So how can I fix this? To avoid nasty surprises and penalties in the future, Stanfield says it's prudent to adjust my withholding ASAP.
I can file a new W-4 with my employer's HR department. The IRS has a withholding calculator on its website where I can plug in information about my income sources and family size, and "it tells you exactly what to put on that W-4," he says.
Stanfield says I can adjust my additional withholding on line 4(c) by doing some math. The easiest way is to reference the amount I owed on this year's taxes. If I under-withheld by $1,200, for example, I need my employer to keep back an extra $100 a month. That's $50 a paycheck. So I put $50 — or maybe even a bit more, if I'm worried — on line 4(c).
I can even adjust my work withholding to account for my side hustles.
"Your pay will go down, but you won't have the shock and awe at the end of the year with a balance due," Steber says.
Thankfully, I don't have to wait until next April to find out whether I did this right. I can adjust my withholding at any point.
Steber recommends doing a midyear tax checkup. In July, I should sit down with my latest pay stub, look at my year-to-date earnings and multiply those wages by two to get a rough estimate of how much money I'll probably make by Dec. 31. Using my 2025 tax rate — my taxes divided by my income — I can determine how much I'll likely owe.
Then I can look at the amount withheld so far in 2026, multiply that by two and compare it to the previous figure. If there's a gap, I can adjust my withholding well before taxes come due.
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The bottom line
Taxpayers owe the IRS when they don't withhold enough in taxes from paychecks or don't pay estimated taxes throughout the year. To remedy this, I just have to do some math and file a new W-4 with my company.
It's a delicate balance between withholding too much (and getting a big refund) or withholding too little (and having to pay, like I did this year). Luckily, it's one we all have control over.
"It's not the government, it's not luck, it's not TikTok videos," Steber adds. "You have the authority to change this — both up and down."
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