For example, changes in your income might affect whether you qualify for the Earned Income Credit.

Credit and deduction eligibility – Other changes in your life can impact your eligibility for various types of credits and deductions.

This significant drop can mean a great deal to your bottom line and may answer the question of “why do I owe taxes?” If they no longer qualify, you no longer can get the Credit.

Older children – To claim the Child Tax Credit, your child must have been under age 18 at the end of the year.

If you’re married, be sure you understand the difference between the status of Married Filing Jointly vs. For example, changing from Head of Household to Single will affect your tax bracket and the credits and deductions you can take.

Filing changes – But big life changes, such as marriage, divorce, retirement or adding a dependent (having a baby, adopting) can affect the your tax situation such as the filing status for which you are eligible and other aspects of how you are taxed.

It could be one big change or several changes that made an impact: If you’re wondering, “why else would I owe taxes this year?” The first question you should ask yourself is “what other changes were there in my tax situation?” Why else would I owe taxes this year? Here’s what to look for Read on to learn about other factors that may affect why you may owe taxes. If the scenarios above don’t reflect your situation, there are other possible reasons why you owe the IRS. The downside of not making as many payments means you have a reduced student loan interest deduction, which could cause you to owe taxes instead of getting a refund. For much of 2020, federal student loan holders got a break on making payments. Student loan repayment status – There may be other impacts on your refund related to coronavirus.Job changes – If you or your spouse changed jobs last year, you would have completed a new Form W-4. Because completing this form can be tricky, it’s possible that slight changes in how you filled it out affected what you withheld each pay period.Check out our Tax guide for gig workers for help. Since there’s no paycheck withholding by an employer in these situations, the job of keeping up with tax payments falls on your shoulders. New 1099 hustle – If you have a freelance or gig job, but haven’t been paying estimated quarterly taxes, that could shed light on the question “why do I owe the IRS?” As a gig worker, you generally need to pay quarterly estimated taxes on your own.To get a sense of how your unemployment income will affect your 2020 tax return, enter it and any other amounts withheld into our tax calculator. When you file, you should include unemployment income on your tax return. Due to the American Rescue Plan Act of 2021, unemployment compensation for taxpayers below $150,000 will be able to exclude $10,200 of their income in tax year 2020. If you haven’t collected unemployment benefits before, you might not realize that unemployment income is taxable at the federal level (and most states). Claiming unemployment – Americans are claiming unemployment benefits in higher numbers than ever before due to coronavirus.Here are a few ways job and policy changes might have impacted your taxes.

Receiving unemployment income, taking on an extra job or self-employment are all plausible causes for your refund amount changing from year to year. That said, the answer to “why do I owe taxes this year?” might have to do with economic shifts due to the coronavirus pandemic. But, for so many people this last year, their situation was not the same. If you received a refund last year, you generally could expect one this year-if your personal tax situation was the same. Why do I owe taxes this year? – It could be due to pandemic impacts Then, we’ll help outline what your next steps should be. We’ll answer, “why do I owe so much in taxes?”. When you see you owe taxes, it can be somewhat of a shock-especially if you were planning on a nice refund. But when that last screen doesn’t show a refund, you have to ask, “why do I owe taxes?” We get it. You plug in your numbers and eagerly anticipate that final number. If you’re like many taxpayers, getting ready to file starts with a quick check with a tax calculator.

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