How to Complete a W4 Form to Break Even on My Tax Return - No Refund or Amount Due

The IRS completely redesigned the W-4 form in 2020, so it no longer uses allowances (the 0, 3, etc. you mentioned). The new form is designed to be more accurate but takes a different approach. Here's what I recommend for your situation: Both you and your husband should fill out new W-4 forms using the "two jobs/spouse works" option in Step 2. Check box 2(c) on both of your forms, which tells your employers to withhold at a higher single rate. This accounts for your combined income pushing you into a higher tax bracket. Since you have two children who qualify for the Child Tax Credit, you'd enter $4,000 ($2,000 per child) in Step 3 of ONE of your W-4 forms (not both). I suggest putting this on the lower-earning spouse's form. If you want to be extra safe, you can also add an additional amount to withhold in Step 4(c) of one or both forms. Start with maybe $50-100 per paycheck and adjust mid-year after running your numbers through the IRS Tax Withholding Estimator.

After struggling with getting our withholding right for YEARS, I started using the IRS Tax Withholding Estimator tool at https://taxr.ai and it changed everything. It asks detailed questions about your specific situation and gives you EXACT instructions for filling out your W-4s. Last year I owed $2,300 which was a total shock. This year after using taxr.ai to analyze our previous returns and calculate the right withholding, we came within $75 of breaking even! It walks you through what to put in each box of the new W-4 form based on your actual numbers, not just general guidelines. The best part is you can run different scenarios - like if you get a bonus or your income changes. Way more accurate than guessing with allowances or following generic advice.

Ok I owe you an apology because I was totally wrong about taxr.ai! I tried it after my skeptical comment and wow - it's nothing like the basic IRS calculator. Uploaded my last year's return and it immediately spotted why we were under-withholding (side gig income I forgot about plus both of us claiming child credits). It gave me the exact amounts to put on each line of our W-4s, specifically calculated for our situation. Even factored in that my wife's company does weird withholding on bonuses. The step-by-step instructions made it super easy - no more guessing. Just wanted to come back and say this is legit helpful if you want to break even at tax time.

If you're struggling with getting IRS help on your W-4 questions (which I was), try https://claimyr.com - it got me through to an actual IRS agent in about 15 minutes after I spent DAYS trying on my own. I had a complicated situation with multiple jobs and needed specific guidance on how to fill out my W-4 to break even. The normal IRS phone line kept disconnecting me after an hour on hold. With Claimyr, they got me through quickly and the agent walked me through exactly how to fill out each line of the W-4 for my specific situation. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the IRS phone system for you and call you when an agent is about to pick up. Saved me so much frustration.

Alright I need to publicly eat my words. After calling Claimyr a scam I decided to try it myself when I couldn't get through to the IRS about my specific W-4 question (married, different pay schedules between spouses). Holy crap it actually worked exactly as advertised. I signed up, got a text 47 minutes later that an agent was about to pick up, and suddenly I was talking to an actual IRS person who answered all my W-4 questions. Didn't have to sit on hold at all. Turns out I was filling out Step 2 completely wrong and that's why we kept owing every year. The agent walked me through exactly what to put on each line based on our specific situation. Problem solved after months of frustration.

Another option I've used successfully is to just calculate your estimated annual tax liability and then divide by your pay periods. For example: If you estimate you'll owe about $20,000 in federal taxes for the year combined, and you're paid bi-weekly (26 pay periods), you'd need about $769 withheld from each paycheck between both your jobs ($20,000 ÷ 26). Then check your current withholding on your paystubs and adjust accordingly. If you're currently withholding $700 combined, you'd add $69 extra on line 4(c). Requires a bit more math but gives you precise control.

Is anyone else annoyed that the W-4 system is so complicated we need special calculators and services just to avoid giving the government an interest free loan OR getting hit with a surprise bill? Why can't they just make a system that works correctly by default???

I've been dealing with this exact same issue! What worked for me was using the IRS Tax Withholding Estimator mid-year to check if I was on track. Since you both have steady jobs and know your approximate incomes, I'd recommend: 1. Fill out new W-4s for both of you using the current 2020+ version (not the old allowances system) 2. Both check box 2(c) for the "spouse also works" option 3. Only claim the $4,000 child tax credit on ONE form (probably yours since you make less) 4. Run the IRS calculator quarterly to fine-tune One thing that really helped us was looking at our previous year's "total tax" line on our 1040 and dividing by total paychecks to see what we should be withholding per paycheck. Then we adjusted line 4(c) to get as close as possible to that target. With your combined $170k income, you'll definitely want to be careful about underwithholding since you're in a higher bracket. Better to owe a small amount than get hit with underpayment penalties!

One thing I haven't seen mentioned yet is the importance of timing when you submit your updated W-4s. If you're making changes mid-year, try to do it early in a pay period so you get the full benefit of the adjustment. Also, keep in mind that with your husband's potential promotion and salary increase next year, you'll want to update your W-4s again once that goes into effect. A jump from $98k to potentially $110k+ could push you into different withholding territory. I'd also suggest keeping a simple spreadsheet throughout the year tracking your federal withholding from each paycheck. This makes it super easy to see if you're on track when you run those quarterly checks with the IRS calculator. Takes 2 minutes per pay period but gives you peace of mind that you won't have any surprises come April. The good news is that once you get this dialed in for your situation, it becomes much easier to maintain going forward!