When you start work, your employer will need to calculate the right amount of federal income tax withholding from your paycheck, based on the information you provided on your W-4 form. The form includes a lot of pertinent information, but perhaps the most important is your allowances and exemptions. Fewer withholding allowances mean less money you owe to the Internal Revenue Service. However, you may wonder, "Why do I owe taxes even though I claim 0?"

In this guide from Fast Auto Loans, Inc., we will explain why you may owe taxes even though you claimed zero and also give you an overview of how to avoid owing taxes when filing. We will also explain how title loans can help those in a financial emergency pay for costs they cannot afford.

Understanding The W-4 Form

A W-4 tax form is the form your employer uses to figure out how much federal income tax they need to withhold from your paycheck. On the day you join the company, you will be asked to fill in this form, providing information about your personal exemptions and allowances.

The information you provide here remains in place until you file a new W-4 form. Although not always necessary, you should typically file a new one whenever your financial environment changes. It's a vital document that informs your employer's accountant how much your paycheck is.

If you claim more allowances on your W4, your employer will withhold a smaller amount from your paychecks, resulting in more money every payday. While you feel more immediately financially flush, you won't get a tax refund and may owe money to the IRS. The fewer allowances, the higher your chances of being eligible for a refund at the end of the fiscal year.

Why Do I Owe Taxes Even Though I Claim 0?

Based on the above information alone, you're likely still confused as to why you owe tax when you don't claim any withholdings on your W-4 form. If that's the case, consider this — did you add "married" to your form? When you claim zero allowances but check the married box, it appears as if you're the only one who earns (i.e., your partner does not).

Therefore, the tax amount sent isn't enough when the two of you earn and the combined amount extends to or beyond the 25% bracket. Thus, you owe the IRS money every tax season.

You may also owe money despite claiming zero if you have multiple revenue streams from side hustles or passive income. This can bring you into a higher tax bracket and increase your tax liability.

How Can You Prevent Owing Taxes When Claiming 0?

The good news is that you can fix this problem, it just isn't as straightforward as you might like.

One method is to set your filing status to single and request an additional withholding on your W-4 form. Another is for you and your partner to use Single withholding tables. Select the "Married but withhold at higher Single tax rate" box to do this. This way, the IRS will see you're withholding using the Single bracket, which is half the amount of the married one.

It’s hard to avoid owing taxes with multiple revenue streams that push you into a higher tax bracket. You need to be aware that you may owe during tax season because of your increased income. We recommend saving 30% of your side hustle income to afford your tax bill.

How To Avoid Owing Taxes When Filing

Now that you can answer the question, “Why do I owe taxes even though I claim 0?” you can start making changes to prevent yourself from owing money every tax season. While owing taxes isn’t the worst thing, those who wish to avoid it can make financial changes to accomplish this. It may lead to you having less money during the year, but it can help you get a large tax refund.

The following are some ways to avoid owing taxes when filing:

• Use the IRS Tax Withholding Estimator to see how much you will pay every year
• Adjust how much your employer takes out of your paycheck for taxes
• Itemize deductions
• Claim eligible tax credits
• Contribute to retirement accounts

While the tips mentioned above can help you avoid owing money on taxes, it’s not guaranteed. You may still owe money every tax season. We suggest saving money every paycheck that you can use for your tax bill in the first quarter of every year, so that you don’t have to stress out about losing money.

Borrow Money For Emergencies With Title Loans

While getting a surprise tax bill is one of the least pleasant financial experiences, it only worsens when life throws you other curveballs alongside it — think medical bills, veterinary fees, or home repairs. Thankfully, you don't have to let unexpected tax bills be the reason you can't pay for personal emergencies.

Fast Auto Loans, Inc. can help with our title loans. Borrowers who have paid off their cars can borrow up to $15,000 in less than 24 hours. The only required items you will need are your driver’s license, lien-free car title, and vehicle for a quick inspection. You can begin the process online and get approved in person the same day you apply.

If you would like to explore title loans as a financial option, simply follow the steps below:

1. Complete the online contact form found on this website. Provide your name, zip code, contact information, and vehicle details.
2. Wait for one of our representatives to contact you. We'll call you to discuss the requirements, answer your questions, and determine where we will meet. We require first-time borrowers to come to the Arizona store location nearest to you.
3. Bring all of your required items to the Arizona store. When you arrive, we will review your documents before examining your vehicle outside. We consider factors like its condition, age, make, model, modifications, and service history when determining its value. Your title loan amount will depend on the value of your car.
4. We will determine how much you can borrow based on your vehicle’s value. Provided you are happy with the amount of money we can offer you, we'll help you sign all the necessary forms to confirm your agreement.
5. Finally, you will receive the amount you qualified for on the same or the following business day. You will receive your money quickly and can continue driving your car while repaying the title loan.

If you need fast emergency cash, contact us today for assistance. Borrowers can get approved regardless of their credit situation. Our friendly loan associates will guide you through the entire process. You can get approved in person in less than 30 minutes to get fast financial relief.

Get Title Loans From Fast Auto Loans, Inc. – Borrow Up To $15,000 Today!

If you owe money on your taxes and face a financial emergency, you can get quick financial assistance with our title loans. Fast Auto Loans, Inc. has a fast, efficient approval process to help borrowers get the money they need quickly. Borrow money in less than 24 hours to resolve your financial emergency before experiencing late fees, service disruptions, and reduced credit.

Ready to get rapid cash today? Fill out our online title loan form or call us to discuss how the approval process works.

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