started a new job and need to make sure my W4 withholdings are correct

[ALC71]

Hi, I started a new job and want to make sure my W4 withholdings are correct.  I'll be married filing jointly with me and my spouse each working and we have one dependent.  How many withholdings should we each have? Thanks.

[RayW7]

TurboTax has a handy W4 calculator that should help with this decision,

W-4 Withholding Calculator - Free IRS W-4 ... - TurboTax

[ALC71]

Thanks.  I used the tool and am not sure how to interpret it.  I have 2 questions:

1. It shows a 2022 estimated payment with a negative amount (and zero for my paycheck impact).  Does this mean the tool estimates I get a refund?  Or does a negative estimated payment mean I owe taxes?

2. It shows I should claim 3 dependents on my W4, presumably for me, my spouse, and my child.  If me and my spouse are married filing jointly and I claim 1 dependent and he claims 2 dependents, is that equal to the 3 dependents this tool recommends?  

[SamS1]

Ray made a great recommendation.  Here is the W-4 tool from IRS.gov.  Not sure if you saw the YouTube video with instructions on using the tool. Click here to watch.  I would go back through tool after reviewing the video.  It should answer your questions on the negative amounts. 

As a rule of thumb, the spouse with the higher income should take fewer exemptions on their W-4.  Remember, on your tax return you are combining incomes that will push you up into higher tax rates.  Having the higher earner withhold more tax will offset some of the additional tax from combining both your incomes.

[ALC71]

not sure what the difference is between exemptions and deductions... on my W4 I just filled out for my new job I am taking 1 allowance for  regular withholding.  My spouse has 2.  Would this equal the 3 the tool recommends?  In other words, are the allowances additive between me and my spouse when we're married filing jointly?

[SamS1]

Yes.  You can split the 3.  Note the withholding tool is to get you as close to zero tax due/zero refund.  If you want a refund in 2021, you should consider dropping to 1 allowance for each of you.

[ALC71]

dropping to one would withhold less taxes, right?  then we might owe taxes?

[npierson7]

You can check out if you have enough withholdings with the TurboTax withholdings calculator: 

W-4 withholding calculator