Hi Saratogagirl12!
When both spouses work, you have a few options for filling out the Form W-4. You'll see those options in Step 2 of the Form W-4.
The most accurate way to calculate withholding for each of you is to use the estimator provided by the IRS at www.irs.gov/W4App.
Another option is for each of you to use the checkbox in Step 2. When the box is checked, the standard deduction and tax brackets are cut in half, resulting in more taxes withheld. This method works best when each spouse has similar income or the lower paying job is more than half of the higher income.
The third option is for the higher earner to use the Multiple Jobs Worksheet on the Form W-4 to calculate the amount of additional taxes to be withheld. Only the higher earner will fill out the Multiple Jobs Worksheet.
You mentioned that you're concerned that a huge amount of money taken out. After you update each of your W-4 forms, and get your next paycheck, you can review the results and project how much taxes will be deducted through the end of the year. If you believe too much taxes have been withheld, you can always adjust the W-4 again. You can adjust your W-4 multiple times, if needed.
Another thing to consider when filling out your W-4 is if you have any other income, such as interest or dividends that doesn't have withholding, you can include that income on Step 4(a) of the Form W-4.
Sincerely,
Kimberly, CPA for over 30 years