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The Real Reason Why You Always Owe the IRS!
This article unpacks the money habits and tax choices that keep people stuck! We'll also cover simple fixes that can stop surprise tax bills and help you plan with confidence!!!
Neyra OperationtheHustle
September 04, 2025 • Estimated Reading Time: 6 minutes
How The Tax Process WorksThe Coffee Shop TaleThink of taxes like buying coffee. If you order 2 lattes and hand the cashier a $10, but your total is $12 when you get rung up, you’ll need to give them another $2. But if you hand over $15, they’ll owe you $3 back. The total never changed - you just either underpaid or overpaid. Thats exactly how income taxes work. You pay the IRS upfront based on what you expect to owe. Filing your tax return is like “getting rung up” at the register. If you paid too much, you get a refund. If you paid too little, you’re on the hook for the difference. |  |
“Your tax refund isn't free money. It's an overpayment of your taxes. It's money you loaned the government all year at 0% interest.”
How to Stop Owing on your Taxes
If you always owe when you file your taxes it means one thing - you haven’t been paying enough upfront to the IRS. Using our coffee shop example, if you want to stop owing, it’s simple… just give the cashier more than you think your lattes will cost. If your total is $12 and you hand the cashier a $20, you won’t owe anything and you’ll even get some change. The same goes for taxes! If you send the IRS extra money during the year than you’ll owe, you won’t owe at filing. In fact, you’ll likely see a refund.
If you’re W-2, you can adjust your IRS withholding via updating form W-4. If you’re a contractor or business owner, you can adjust your estimated tax payments accordingly.
But here’s a key point: overpaying on your taxes and getting a big refund doesn’t actually lower your tax bill, it just means that you prepaid more than you needed to. I meant think about it, if you paid for your $12 coffee with a $100 instead of giving exact change, does it mean you paid less? Nope.
The real strategy is learning how to lower your total cost at the register in the first place. That’s what we’ll cover next 👇👇
How to Actually Lower your Tax Bill (non business owners)
Here are some ways you can lower your what you’re taxed on, these are called deductions or “write-offs.” These are different from tax credits, which will lower the amount of tax that you owe.
As an individual, you got a few options on ways to lower what you’re taxed on: above the line deductions, and, itemized deductions or the standard deduction.
Above the line deductions
Student loan interest
Health savings account deduction
Educator expenses (teacher expenses)
Traditional IRA contributions (subject to income limitations)
Alimony payments (subject to restriction on timing of divorce agreement)
One half self employment taxes
Self employed retirement
Military moving expenses
Standard deductions (2025)
Single and married filing separately - $15,750
Married filing joint - $31,500
Head of household - $23,650
Itemized tax deductions can include (subject to limitations):
Medical & dental expenses
Taxes - state & local taxes, property taxes, sales taxes, and real estate taxes
Home mortgage interest
Charitable contributions
Casualty & theft losses - from a federally declared disaster area
Other - gambling losses, casualty & theft losses of certain income-producing property, certain unrecovered investment in a pension, and more.
These are all pieces that make up your tax return. Generally it looks like this, you start with income (from all sources) and you can subtract the above the line deductions. From there, you subtract either the standard or itemized deductions (generally whichever is bigger) and calculate your tax due after those deductions. Tax credits are then applied to the tax due, here's a list of tax credits available to individuals.
Earned income tax credit
Child tax credit
Child and dependent Care tax credit
American opportunity tax credit
Lifetime learning tax credit
Saver’s credit
Clean vehicle tax credit (EV)
Home energy
Premium tax credit
So what do you do?
It depends. You should be tired of hearing this answer by now because this is ALWAYS the answer. If you want to do what makes the most sense financially, its pay what you owe and put the rest of your money to work. This is what I do, my goal is to get as close to owing $0 as possible. By doing this, I am able to invest more during the year vs waiting until I file for a refund to get it back.
But you aren’t me. My plan may not work for you. If you are someone who will be kept up at night at the idea of owing the IRS any money when they file, this is probably not a sustainable plan for you. Maybe you’d be better off adding a bit of a cushion or working with a CPA regularly to make sure your estimated payments are in line with what they should be.
At then end of the day, its not about what the “right” thing to do is as much as its about finding the best thing FOR YOU. Hopefully, I gave you some valuable information to think through to help you make the best decision for you! See you next week :)
-Neyra