[rose12345]

Hi Gurus!

I have some questions about filling w4 form. I started my OPT from January 15th and I am currently in H1B starting from Oct 1st. I got married in Oct 4th and I think I will have to change my w4 form. I am so confuse in filling 1s and 0s in w4... here are my details.
I think I fall under highest paying job, but my husband goes to school. I think the tuition fee can be claimed under itemized deduction. Also, my husband works 20 hours within the school. I always used to fill only the 1st page of w4 and the total number (in H) used to be 1. Now I think this will not be the same if I am married and planning to file jointly. Please help me understand what do I need to do here to fill w4 form.

Thanks

[AtlantaTaxExpert]

You should BOTH claim ZERO exemptions on your W-2.

The reason is simple: The FIRST dollar of your husband's lower income is taxed at the rate that the LAST dollar of your income is taxed.

EXAMPLE: You make $100K and he makes $10K. Since you are filing jointly in 2007, the first $16,600 of your income is tax exempt, but then the tax raises progressively (which means the more you make, the higher your tax rate). The last dollar of your $100K is taxed at 25%.

Since you are filing jointly, you have already used up your spouses personal exemption and standard deduction. So the FIRST dollar HE makes is taxed at 25%.

By you both claiming ZERO exemptions, you should have enough tax withheld that you will probably get a small refund or, at most, have to write a small check when you submit your tax return.

Now, if your income was roughly equal (saye BOTH at $100K), then you both claiming ZERO exemptions would NOT BE ENOUGH! You would have to have additional income withheld from your paychecks to cover the additional tax liability.

[rose12345]

Thank you very much... that was helpful.

So, I don't have fill second page of w4 and the total (in H) should be 1... am I correct?

Thanks

[AtlantaTaxExpert]

Actually, the total should be ZERO!

[rose12345]

Thanks a lot.

I think I have to fill "Two earners/multiple jobs worksheet" in page 2 of w4 form. After I filled it out,line number 9 on page 2 came to $170 additional withheld from each pay check. Does this mean that we will now be paying more in taxes than when we were single?

[AtlantaTaxExpert]

Not really. The U.S. Congress addressed that issue several years ago, removing the "marriage penalty" from the tax tables.

Now, married couple pay about the same level of taxes as singles who live together and file separate tax returns.