Newlywed's change to W-4 form
|  Dear
Tax Talk,
I was just recently married. My husband and I both
work and we plan to file jointly for our taxes next year. My question is: Is it
OK to still claim myself on my Form W-4 and not be penalized? I am accustomed
to claiming "1" while I was single. What would be more beneficial for
us?
-- Jessica
Dear Jessica,
Marriage is a life altering event.
It also has tax implications. Single and one dependent was fine for those carefree
single years, but now you might want to visit the IRS Web site's Form
W-4 calculator.
Form W-4 tells an employer how much tax
should be withheld from an employee's wages based on withholding tables that are
comparable to the tax rates that apply to that person's filing status (i.e., single
or married) and the amount of deductions that person expects to claim (i.e., allowances).
The withholding tables start at zero income and work their way up. However,
when a married couple both work, one spouse's wages are taxed at a rate that is
higher than the amount in the tables. A married couple's wages are added together
and hence the second spouse's wages are taxed at higher marginal rates that don't
start at zero income. Unless you fine-tune your withholding
early in the tax year, a two-income married couple will end up owing taxes with
their tax return, including estimated tax penalties for not paying in sufficient
amounts throughout the year. With all the other pressures facing newlyweds, the
last thing you need is a large balance due with your first joint tax return. To
work through the Form W-4 calculator you should have your most recent paycheck
stubs (yours and your spouse's) plus an estimate of additional income you'll receive
and projected deductions such as IRAs, 401(k) contributions, home mortgage interest
and real estate taxes. The calculator will give you an estimate
of your 2007 income tax and any balance due after counting your current withholding.
The calculator will tell you how many withholding allowances to claim and suggests
any additional amounts that should be withheld out of each paycheck to cover your
anticipated liability for 2007. The additional withholding amount suggested by
the calculator would be entered on Form
W-4 line 6 when you give your employer the revised Form W-4. To
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