My wife and I file jointly, w/1 child. We each have 1 job, no extra income. Every year we owe $1K-$3K in federal and get a refund in state. Why? What should I do?

[JeffVA]

I have a substantially higher income and claim all 3 exemptions on my W-4, my wife claims 0. Every year Turbotax predicts a $2K refund for next year, but that never happens

[DoninGA]

You will need to adjust your W-4 so that there is more federal income taxes withheld.

Go to this IRS website for a tax withholding estimator - https://www.irs.gov/individuals/tax-withholding-estimator

[NCperson · Accepted solution]

@JeffVA there is no such thing as "exemptions" on a W-4 anymore

The new forms mimic the tax return, so there is really no reason following these new forms don't get you close to no tax due / no refund. 

Review this form and get your payroll department to adjust accordingly, 

Follow the directions CLOSELY.  do your's first (since you are the higher wage earner and put down 1 child / $2,000 in step 3; your spouse leaves this as zero/ no children. )

https://www.irs.gov/pub/irs-pdf/fw4.pdf