[silentme]

My husband and I work and I'm trying to figure out what to claim on our W4s to keep from oweing every year. Together we will only make around 70,000. Last year we claimed married and 1 each and wound up oweing almost 3000 and we can't pay that every year. Can you help me figure out what to do?

[Perito]

You can *deduct* a certain amount of money for each exemption you claim. In 2008, it's $3500. If you are in the (for example) 28% tax bracket, each exemption will reduce your taxes by 0.28 * $3500 = $980. If you each claim 0 exemptions on your W4, then approximately twice that amount of money will be withheld (now lurking folks, this is a back-of-the envelope calculation. So don't get in a tizzy). This will mean that you'll owe about $1040 instead of $3000.

You can ask your employer to withhold a total of $3000 more each year (between the two of you), or you could make quarterly estimated tax payments.

[AtlantaTaxExpert]

The rason you are paying is that the first dollar of YOUR income is being taxed at the level of the LAST dollar of his income.

If you BOTH claim Married with ZERO exemption, you should be covered for next year's tax return.