My spouse claims 0 and I claim 1 on our Federal return (Married filing jointly.) We both work full-time, and have 2 children (18 and 17 years of age). Each year we owe Federal and State taxes. Besides increasing our 401K contributions, any advice on how to lower our tax burden through adjustments to our W-4’s?
Hello BK5329,
Thank you for joining us today! We are so happy to have you here! I'm sorry to hear that you owe every year and that definitely can be a burden. With your children's ages, they will not qualify for the Child tax credit, but may still qualify for the other dependent credit of 500.00. I'm not sure if your 18 year will graduate this year and start college in the fall yet, but if so, you might be eligible for Education credits. I post a link at the end of this post just in case. Claiming Single 0 will inform your employer to withhold more federal taxes, which may reduce your tax burden at tax time. Also, there is a worksheet (page 3, section 2(b)) for Form W4 that will help determine if you should have additional Federal Withholding. It's always a good idea to use the TaxCaster to have a picture of where you might be come tax time, so you can be proactive and make adjustments sooner.
Form W-4: https://www.irs.gov/pub/irs-pdf/fw4.pdf
TurboTax Caster: https://turbotax.intuit.com/tax-tools/
Education Credits: https://turbotax.intuit.com/tax-tips/college-and-education/what-are-education-tax-credits/L7TuLrVqZ
Hope this helps, and I am happy to answer any further questions.
Hi BK5329,
Sorry you have to pay huge taxes every year. You can avoid this by using the Withholding Tax tool in the links below to give an idea how much to withholding. You change your variables as much as you want until you reach the amount you want. Have fun with it.