W4 Help to Avoid Owing So Much Federal Tax

[ELM22]

Hello, for the last two years we have owed over $5,000 in federal taxes. How should we adjust our W4's so we don't owe so much?

I make $150,000/year. My W4 is married, filing jointly and claiming 2 dependents.  I do not have the box 2 (c) on W4 checked. Should I? 

My wife makes $ $75,500/year and she is filing single and claiming 1. 

[Alicia65]

Your W4 tells your employer what to withhold. You are a two income family. You both want to check box 2(c) on your W4. Together you make under $400,000 so you do want to do Step 3 on W4. Your wife wants to change to Married filing Jointly. In Step 4(c) you can add extra withholding. But I would first see how the adjustements work out by marking yes to 2(c) 

5 reasons to adjust your W4 

@ELM22  Edited 5/30/24 11:25 E.S.T

[ShannonDuff]

Owing money during tax time can be very frustrating but understanding how it works can help. 

Step 1 is going to be your personal information.

Step 2 is where you would enter that both spouses work.

Step 3 is where you would claim any dependents, (this accounts for any child tax credit you may receive) 

Step 4 will account for other adjustments such as extra income outside the two main jobs, itemized deductions, or add extra withholdings. 
Checking box 2(c) is the most accurate way to determine withholding when a taxpayer has 2 jobs or if the spouse works and the income is close to the same. If there are more than 2 jobs or a huge difference in income then 2(b) is the better option. 
Lets say your current withholdings are $2k short of what it needs to be. Now take that $2K and divide it amount the amount of paychecks you receive. example 2,000/26= 77 with rounding. This means you need an extra $77 taken from each paycheck to make up the difference.  You can add this amount in step 4 on the W-4.  

[ELM22]

Thanks for the info!