Who claims dependents?

[victoria-butler]

My husband is starting a new job. When filling out the W4 forms, how many deductions should he claim? The form seems different than the one I completed for my job. So he claimed "1" for himself and "1" for me. But should he also claim "2" for our children? Or do I claim those with mine? 

We want to limit the amount of taxes we have to pay or get back when filing.

For this year, we will be filing a joint federal return but individual for states (I am Montana; he will be split Ohio and Montana). 

[Gabriella_EA]

Hello @victoria-butler!

Thanks for your excellent question and for providing such helpful detail!

The W-4 is a standard form across employers, so if you and your husband are both updating your withholding for 2023, you'll be using the exact same form. However, some employers use different software/methods for capturing your withholding information, so even though it's the same W-4, the process of filling it out can look different with different employers! Regardless, one of the best ways to get your withholding right for a married filing jointly federal return is to use the IRS Withholding Estimator. It sounds like you will benefit from sitting down together to work on this, when each of you has a most-recent paystub from any/all jobs worked in 2023 in hand. You can plan for this tool to take 15-20 minutes or so to walk through, and at the end of it, you'll have an idea of what you're on track for with your 2023 withholding, and you can use this tool to determine how to adjust the W-4s to get you to the end results you're looking for.

I'd love to hear a little more about your state circumstances! Could you provide more detail? Also, you'll want to note that Ohio requires you to use the same filing status for the state as you do for federal. If you file married filing jointly for federal, it has to be married filing jointly for Ohio as well.

[victoria-butler]

Thank you! I started using the W-4 calculator (in TurboTax) to try to figure this out. He just seems to be losing a lot out of his paycheck, but we don't want to incur a balance due at the end of the year. I will try the IRS tool you provided.

As for the state filing, it is always a tricky process for us since he is in the military. I am a Montana resident, but he is an Ohio resident. However, he is becoming a Montana resident this year (hopefully making filing taxes easier and joint moving forward).  TurboTax allows me to specify that his income is military and separate the states accordingly.

[MelodyB]

Typically, the spouse with the higher income claims the dependents.  The W-4 has changed because we no longer have exemptions since the tax law changed in 2017.  I recommend you check out our W-4 calculator.  People find this very helpful.

https://turbotax.intuit.com/tax-tools/calculators/w4/

[Gabriella_EA]

I think the IRS tool should work great for you on your federal withholding. It's certainly possible he's having more withheld than necessary, and that tool will help you determine where you're projected to land. If it looks like you're going to get a substantial refund, feel free to use the slide bar at the end of the IRS tool to adjust your end results to where you want them, and then click the "How to Adjust Your Withholding" to get details on exactly how to update the W-4(s).

As for the states, that can get tricky! Especially the withholding part. For what it's worth, it sounds like you're still probably best off filing married filing jointly for both states, as Ohio allows you to each have different residency statuses even on a married filing jointly return, and Montana won't tax nonresident military earnings. Then you also won't have to consider which of you is claiming which dependent(s). As you think through your withholding amounts for each state, keep in mind what each state will and won't tax - it should at least help.