I have owed federal taxes for the past 3 years and I'm looking for the best way to prevent that from happening in the future. I am married with one child. Both my spouse and I file "married, filing jointly" and claim "0" withholdings. This past year (tax year 2017) I elected to withhold an extra $50 per paycheck to help reduce this burden at the end of the year. I will see if that's enough come tax time this time around. In the future, I'm wondering if I should stop the additional $50 payment and increase my 401(k) contributions instead? Or, should we file "married, but withhold at single rate"?
Increasing your withholdings is the correct way to combat the underpayment ... and switching to withholding at the higher single rate for at least one of you to start with is a good idea ... in fact the one with the lower income should already be doing so. Look at the withholding tables to see what will be withheld for married or single and the # of allowances to help you make your W-4 decision easier ... the 2018 pub is not out yet so use 2017 for now ... charts start on page 49