Questions regarding w4 and cafeteria plan?

Question

Stay with me--I have never had a job and this is my first time with this.

Questions:

1: For the total number of allowences I am claiming...
a) My husband is working as well. Do we BOTH claim our 2 children or does he claim one and claim the other?
b) It states if I have at least $1500 of child care expenses. We don't in 07 but will have them in 08.

2) I don't understand this:

Last year I had a right to a refund for all federal income tax withheld because I had no tax liability and this year I expect a refund for all federal income tax withheld because I expect to have no tax liability.

We were given a refund last year, but I don't quite know how that relates?

And about the cafeteria plan:
We have 2 kids that are going to be in daycare with about $185/week. Should I take out the max of $5K even though I'll only be making $30K? How exactly does that work?

The HR gal was gone by the time I got back from lunch.

Answer 1

You calculate your total allowances using the worksheets, then split them between the two of you however you want. But don't BOTH claim them.

Unless both you and your husband expect a refund of all the tax you've paid in, do NOT put exempt on your W-4. Getting a refund doesn't mean that you had NO tax liability.

You might as well take out the full allowable $5000 for child care flexible spending account. Sounds like your expenses will be a lot more than that. This will shelter $5000 of your income from being taxed. For expenses beyond that you might be able to take a child care tax credit.

Answer 2

You both claim the kids. Max the 5k. Alan

Answer 3

tl;dr