W4: "Married, but withhold at higher Single rate" question?

Question

If we check the box Married, but withhold at higher Single rate on both of our W4s do we still need to claim 0 on our W4s AND have my employer take out more $ each paycheck? Or does that box take care of it all?

Background: Married for 5 years. The first 2 years I did not change our W4s and we got a refund check of $3500 each year. Then I changed our W4s and claimed 1 on each of them. At the end of the year we owed over $1000.

Last year, I changed our W4s to claim 0 on each. By the middle of the year, I knew I would be behind so I had them take $30 out of my check each week and we got a refund of $500.

At the beginning of this year, I messed up again and claimed 1 on each of our W4s.

Now, I do know that I need to change our W4s to claim 0 on both. But do we also need to check the "Married, but withhold at higher Single rate" box? (In other words, do I do both?) And will I still need them to take more out each week on top of that? Or does the box take care of it?

Thx

Answer 1

Using both yours and your spouses most recent paycheck stubs, use the IRS withholding calculator to compute what you should be claiming on your W4's
Here is the link
http://www.irs.gov/individuals/page/0,,id=14806,00.html

Answer 2

The "withhold at higher single rate" should do it. I did this for years to cover both my wife's income and mine plus several thousand dollars of "self-employment" income. Every now and then I had to adjust things for the last quarter, but if it is all deducted from your paycheck, the IRS deems it to be have paid in regularly through the year, thus NO PENALTY!

Another way to do it is: Divide 90% of your tax from the previous year by the number of pay periods and have this amount deducted from each check instead of the table amount. You could use 100% of your previous tax and/or tweak the answer to cover everything possible. Or, since you did the extra $30 per week for half of last year and got a refund, try $20 per week for the rest of this year.

Answer 3

You can find a self-calculating form W-4 at this site:

http://www.pdftax.com/