My wife and I seem to owe federal taxes every year. We both claim 1 allowance on our W-4. Our total wages from our 2013 tax return was $153,000. We both work full time jobs and seem to not be able to get any credits because we "make too much". My question is should I choose 0 allowances? I am just worried about how much our paychecks will decrease each month. We both have student loans and other debt and are barely making it now... However, I can't afford to pay the IRS $2-4k every year.

I would suggest that you submit a new W4 to your employer with an entry on line 6, "Additional amount you want withheld from each paycheck." If you find that you typically owe $3K each year and are paid monthly, you can specify that they withhold an aditional $3K/12 = $250 per month.

Do you own a home? Do you take the Standard deductions instead of itemize? Do you prepare your tax returns yourself or have a preparer?

You or your wife could change your allowances to 0 on your W-4, which will mean more taxes will be withheld from your paychecks than your current 1 allowance.

Also if you have student debt then you should be getting a 1098-T from your loan provider if you paid interest on your student debt, which will be a credit on your federal return.

Student loan interest is recorded on Form 1098-E (Form 1098-T is for tuition paid for the taxpayer, the spouse or one of the dependents).

Their income is TOO HIGH to be able to deduct student loan interest.

Thanks for the clarification AtlantaTaxExpert. I knew about the student loan interest, just made a typo on the form number.

Interest rates are still low! You should be making major purchases such as homes and vehicles using fixed rate financing, and deducting the interest. If this isn't something obvious (sorry if it is), then see a financial planner.