When filling out your W-4, you can claim how much money you want your employer to withhold from your paycheck for federal income taxes. You can withhold extra money to avoid having to owe during tax season, but most employers will take out enough taxes that you can claim 0 without a problem.

If you’re finding yourself paying taxes despite claiming nothing, Carolina Title Loans, Inc. can help you understand why. You’ve come to the right place if you want to know why this is happening and what you can do about it. We can also explain how an online title loan can help you cover emergency costs that arise while attempting to repay your tax bill.

Why Do I Owe Taxes Despite Claiming 0?

Finding out that you owe taxes even though you’ve claimed nothing can be quite a shocking experience. Still, there’s no need to panic or make any rash decisions. Instead, remain calm, assess the situation, and decide what you will do to resolve it.

Let’s look at five reasons why you still owe taxes despite claiming 0 on your W-4:

1. Your Other Incomes

First and foremost, ask yourself whether or not you’ve accounted for all your sources of income. If you’re like many people, you might have money coming in from your main job and a side hustle, such as driving for Uber Eats, doing freelance writing tasks, or selling clothing items you make.

This other income will certainly count towards your tax liability, explaining the taxes you owe. If you do not set aside money for taxes for freelance work, you will owe money every tax season to account for this extra income. Make sure you save about 30% of your freelance income to account for the money you might owe during tax season.

2. Changes In Your Tax Bracket

Your tax liability is determined by your tax bracket, which is based on your income. If your income increases, you might move up to a higher tax bracket, resulting in a higher tax liability.

If this change is new to you, you might have overlooked how it will affect your tax liability. Making extra money without your employer adjusting how much you send to the IRS can affect whether or not you owe money during tax season.

3. Your Tax Deductions And Credits

Some people mistakenly assume they owe no taxes because they take advantage of tax deductions and credits. Unfortunately, those might not be enough to bring your tax bill down to zero. Besides that, you might discover that you don’t qualify for certain deductions or credits as you might have assumed.

In both of those situations, the result is the same: your tax deductions and credits aren’t enough to cover your whole tax liability, leaving you owing the IRS money. Make sure you calculate your tax liability, how much your employer withholds every paycheck, and what relief you are getting from deductions and credits to determine what you will owe on your taxes.

4. Personal Changes

Earlier, you read that income changes can put you in a different tax bracket and leave you owing more taxes.

Changes in your personal life, such as getting married, divorced, having children, or even purchasing a home, can also cause the same outcome. Each of these personal changes has tax implications that you must understand carefully.

For example, some changes might mean you’re no longer qualified for the same tax deductions or credits. As a result, claiming 0 on your W-4 may no longer be enough to cover what you owe to the IRS. You may have to put aside money income every paycheck to compensate for your increased tax liability caused by your personal change.

5. Miscalculations

It’s important to consider whether or not you made any miscalculations. Double-check to ensure there aren’t any mistakes regarding your claims or anything else involving your taxes.

It’s possible when calculating what you should owe, how much your employer sets aside, and what your deductions are that you made a mistake. Human error happens all the time, so you shouldn’t feel bad. Now that you know you owe money, you can address this and save money to pay your tax bill.

What Should You Do After Owing Money Despite Claiming 0?

Let’s suppose you suddenly find out that you have taxes to pay despite not claiming anything. In that case, the only way forward is to figure out how to pay that bill fast to avoid any penalties or other issues.

Here are five things you can do to resolve your surprise tax bill.

• Assess: Finding out from the tax authorities that you owe them money can be overwhelming. You first need to calm down, take a deep breath, and assess the situation. That way, you won’t blow it out of proportion in your mind.
• Confirm: Next, confirm the exact amount you owe in taxes. That means recalculating everything and potentially consulting a qualified professional.
• Prioritize: Your taxes are the one kind of debt you don’t want to delay paying. Prioritize your tax bill until it’s paid off. That means temporarily delaying some other financial goals to avoid the fees and legal issues caused by not repaying your tax bill on time.
• Reduce: Prepare to cut back on your spending during this period. Remember, your goal is to pay your tax liability as quickly as possible. Avoid spending money on inessentials, such as fast food, luxury items, or new clothes, to pay off your tax bill as quickly as possible.
• Borrow: Unexpected costs and financial emergencies can occur while you’re trying to pay your tax bill. If that happens, consider borrowing emergency money to cover those costs so you can continue focusing on paying your taxes.

Borrowing Money Through A South Carolina Title Loan

If you experience financial emergencies while paying your tax bill, Carolina Title Loans, Inc. can help you with our car title loans. If you own a car with a lien-free title, you can consider getting a title loan to cover your emergency costs. This option could help you quickly access up to $15,000, using your lien-free car title as collateral.

Start the process of getting an SC car title loan on our website by filling out our online form. A loan representative will verify your information and set up an in-person meeting at a convenient location for you, such as your home or office. You can bring your driver’s license or other state-issued ID, your vehicle for an inspection, and your lien-free car title to get approved for a title loan.

If you get approved, you can receive your emergency cash the same or the next business day.

Cover Your Emergency Costs With Carolina Title Loans, Inc. Now!

Paying taxes should always be your top financial priority. If you find that you owe the tax authorities despite claiming 0, focus on paying that amount quickly. Emergency costs can come up during this process, and you can consider borrowing money to cover those costs if you cannot afford them.

Carolina Title Loans, Inc. is always ready to help you get title loans to cover emergency expenses. If you need emergency money quickly, submit the online form on our website with your details. A friendly representative will call you back soon to guide you through the simple process.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.