Changing W4 after spouse started working

[tabshe17]

My spouse started working in Dec 2021 and will be getting her first paycheck by year end. So far in W4, I had claimed W4-Allowance=2, but since my spouse started working, I need to change it. Looks like W4 has changed since last time I filled it (back in 2017).
My annual income (Salary RSU) = ~340K  [W2]
Spouse's annual income = 70k [W2]

How should I fill new W4?
Step 2 has an option to select (c) if both of them are similar paying jobs. I am not sure what "similar" means here. Is it the earnings or the way it is earned (W2, 1099, self employed etc.)?

PS: No children or dependents

Any other suggestions?

Thank you in advance.

[Critter-3 · Accepted solution]

Both of you should be choosing the SINGLE option on the new W-4 due to your high incomes and no kids.  Leave the rest of the form blank.    Or 

OR  choose MFJ for each of you and complete the worksheet on pages 3&4 to get the amount the higher wage earner needs to add to line 4c.  

[Opus 17]

Just read the W-4 instructions carefully.  You can do as @Critter-3 suggested, or you can use the IRS web site listed in instruction 2a.  (This will work best if you wait to use it until after you and your spouse each have one paycheck in 2022, the calculator will help you set your withholding for the rest of the year.

As noted in the instructions, you should do the calculations and worksheets once, then submit a new W-4 to both jobs based on the results.  

[Critter-3]

@Opus 17 

It would be nice if the IRS tool actually told you how to complete the W-4 form correctly but it only estimates the bottom line of the tax return based of the current rate of withholding on the current paycheck.  It is pretty much a useless tool if you don't know what to do with that information.  

Filling in the new W-4 is more complicated than it was in the past ... so sometimes using the info in pub 15-T is more help :    https://www.irs.gov/pub/irs-pdf/p15t.pdf

[Opus 17]

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@Critter-3 wrote:

@Opus 17 

It would be nice if the IRS tool actually told you how to complete the W-4 form correctly but it only estimates the bottom line of the tax return based of the current rate of withholding on the current paycheck.  It is pretty much a useless tool if you don't know what to do with that information.  

It used to tell you what to claim to make your withholding come out a certain way.  It doesn't do that any more?

[Critter-3]

Not that I can see ... tried it several times and no clue on how to fill in a W-4 is listed. 

[Opus 17]

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@Critter-3 wrote:

Not that I can see ... tried it several times and no clue on how to fill in a W-4 is listed. 

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Well, it's the end of the year, and the IRS estimator is highly focused on this year.  It's too late to change your W-4 to affect your 2021 withholding or taxes.   We should see what it does in January.