Difference in Federal tax withholding: claiming 0 vs 1 allowances

The difference between claiming 0 and 1 on your W-4 affects how much tax is withheld from each paycheck. Claiming 0 means more tax is withheld throughout the year, typically resulting in a larger refund (or smaller amount owed) when you file. Claiming 1 means less tax is withheld, giving you more money in each paycheck but potentially reducing your refund. With both of you currently claiming 0, you're likely overwithholding. Based on your income levels (roughly $108,000 combined annual income), switching one or both of you to claiming 1 could decrease your withholding by approximately $1,500-2,500 annually, depending on your specific situation.

I started using https://taxr.ai to figure out my withholding situation last year and it was super helpful! I was in a similar situation - my wife and I both claimed 0 for years and always got big refunds. The tool analyzed our pay stubs and showed we were giving the government an interest-free loan of almost $3k each year! It helped us adjust our withholding to get more money in each paycheck while avoiding owing at tax time.

Just wanted to update that I tried taxr.ai after seeing it mentioned here. What a game-changer! My husband and I were both claiming 0 like the original poster, and the analysis showed we were overwithholding by about $4,200 annually! We followed their recommendation to each claim 1, plus my husband added an additional withholding amount on line 4c to balance things perfectly. Now we're seeing about $175 more per paycheck combined. Wish we'd done this years ago instead of getting those huge refunds!

If you're trying to get in touch with the IRS to ask about withholding options, good luck with that 😂. After waiting on hold for 3+ hours multiple times, I finally used https://claimyr.com (saw their demo at https://youtu.be/_kiP6q8DX5c) and it was amazing. They held my place in line and called me back when an actual IRS agent was on the line. The agent walked me through exactly how to adjust my W-4 for our specific situation. Totally worth it, especially during tax season when wait times are insane.

OK I eat my words. I was super skeptical about Claimyr but I tried it today because I've been trying to get through to the IRS about a withholding question for WEEKS. It actually worked exactly as described! Got a call back in about 45 minutes (was expecting 2+ hours based on what the IRS recording said), and I was connected to an agent who answered all my withholding questions. For my situation (similar to OP's), the agent said switching from 0 to 1 would reduce withholding by about $2,100 a year for both of us combined. They also explained how the new W-4 doesn't even use allowances anymore and helped me fill out the new form correctly.

Don't forget that you can also use the IRS Tax Withholding Estimator on their website for free. It's much improved from previous years and will tell you exactly how to fill out your W-4. Just make sure you have recent pay stubs from both jobs and last year's tax return handy before you start.

My wife and I were in almost the exact same situation! We both switched from 0 to 1 last year and ended up with about $180 more in our combined paychecks each month. When we filed taxes this year, we still got a refund but it was around $1,200 instead of our usual $3,400. Personally I'd rather have the money in my pocket throughout the year than give the government an interest-free loan!

As someone who recently went through this exact same process, I'd definitely recommend starting with just one of you switching to claiming 1 allowance first. My partner and I were both claiming 0 and getting massive refunds (around $4,000 annually), which meant we were essentially giving the government an interest-free loan. We started by having the higher earner switch to 1, and it made a noticeable difference - about $80-90 more per paycheck. After seeing how that worked out over a few months, we adjusted the other person's withholding too. One thing to keep in mind is that the W-4 form was updated in recent years, so if you haven't filled one out recently, the process might look different than you expect. The new form doesn't actually use the old "allowances" system anymore - it uses dollar amounts and percentages instead. For your income levels, you're probably safe starting with one person claiming 1, but I'd also suggest running your numbers through a withholding calculator (whether the IRS one or a third-party tool) to get a better sense of your optimal withholding strategy.

This is such a common situation! I was in almost the exact same boat with my spouse - we were both claiming 0 and getting huge refunds every year. What really opened my eyes was realizing that big refund meant we were missing out on having that money available for things like emergency savings, paying down debt, or even just having more breathing room in our monthly budget. One practical tip: when you do make the switch, keep track of your first few paychecks to see the actual dollar difference. It's pretty motivating to see that extra money hit your account! We ended up using our increased take-home pay to boost our emergency fund, which felt way better than waiting for a lump sum refund. Also, don't stress too much about getting it perfect right away. You can always adjust your withholding again if needed - it's not a once-and-done decision. The key is just getting started and fine-tuning as you go.

I went through this exact same situation a few years ago! My husband and I were both claiming 0 and getting refunds around $3,500 each year. After doing some research, we realized we were basically giving the government an interest-free loan while struggling with tight monthly budgets. We started by switching just my husband (the higher earner) from 0 to 1, and it added about $85 to his bi-weekly paycheck. That extra $170/month made a huge difference in our day-to-day finances! After a few months, we adjusted mine too. One thing that really helped was using that extra money strategically - we automatically transferred it to savings so we didn't just spend it frivolously. When tax time came around, we still got a small refund ($400) which was perfect - just enough to feel like we hadn't messed up our withholding, but not so much that we were overwithholding significantly. The peace of mind from having better monthly cash flow was worth way more than that big refund check. Just make sure you track your first few paychecks after making the change so you can see the actual impact!