Should you replicate the exemptions and additional amount withheld on your state W4 as your federal W4 when both spouses work full time?
There is no rule that requires you to report the same amount of exemptions on your Federal and State W-4 forms. By entering zero on both of these forms, you will have a higher amount withheld from your paycheck. If you'd also like to have a higher amount withheld from your paycheck for state tax purposes, then you should also enter a zero on the state form.
You can talk to your human resources department to verify the exact amount that will be withheld for certain exemption numbers reported on Forms W-4.
I wish there was a worksheet for the Michigan W-4 like there is for federal W-4 regarding two-earners to figure out how much additional income, if any, I should have taken out for each payroll. I found out that 4.25% of gross pay should be withheld and for my bi-weekly pay and 0 exemptions, there will be $51.26 taken out per pay period. How do I know that will be enough taken out with my husband having 4 exemptions on his state W-4 in order to avoid owing taxes?
@nicoletennenhous Are you saying that you calculated $51.26 of state or federal taxes will be withheld from your paycheck?
I got that number from the Michigan Income Tax Withholding Tables available on the Michigan website. That's the amount of income tax withheld for 4.25% of gross pay withheld with 0 exemptions on more than $1,206 amount of bi-weekly pay per payroll period.
@nicoletennenhous It's likely that your husband won't have much taken out at all with four exemptions. If you estimate that your joint Michigan tax liability will be greater than $1,230 ($51.26 x 24) then you should have your husband change his W-4 to lower his exemptions. It's always better to overpay a little than to owe big time. If you end up with a huge refund next year then you'll know you have some flexibility in the future and can adjust your W-4s accordingly.