Jesse Whitehouse Developer | Analyst

Completing the W-4 When Married, Filing Jointly

If you're uncertain how to complete your own W-4, please speak with a qualified tax advisor.

For all our moaning every April about the feds stealing our hard-earned dollars, it seems like everybody loves tax time. Sure, it’s a headache preparing the forms and all that. But it turns out we mostly enjoy the dopamine surge when our tax return clears. I’ve never had the pleasure, actually, because I adjust my W-4 each January to tie my bi-weekly withholdings to my year-end tax burden. This usually works great - but I overshot last year. I under-withheld around $2,000 by claiming too many allowances. Ouch. Spurned but not deterred, I conservatively adjusted my W-4 in 2015 to increase my pay-period withholdings. I didn’t expect a large payday this time around; but I was looking forward to an easier go of things in my 2015 taxes.

No such luck.

When we filed our returns this year, my wife and I found a nasty surprise. A $3,000 shortfall out of nowhere. We redid TurboTax from scratch. Three thousand clams. We double-checked with an online calculator. One…two…three large. We even dug out the tax tables and calculated everything by hand. We definitely owed the money. “How did this happen?” we asked.

We misunderstood the tax code. That’s what. Have a look at the tax table below. This shows the marginal tax brackets for married couples filing jointly in the year 2015.

Tax Rate Income
10% $1 to $18,450
15% $18,451 to $74,900
25% $74,901 to $151,200
28% $151,201 to $230,450
33% $230,451 to $411,500
35% $411,501 to $464,850
39.6% $464,850+

If my wife and I both make $20,000 this year, our incomes individually each fall in the 15% tax bracket. The first $18,450 at 10%, the remaining $1,550 at 15%. That’s $1,845 + $232.50 = $2,077.50. Since there’s two of us we’d double that, for a total tax of $4,155, right?

Wrong. Since we file jointly, our incomes are combined for taxation purposes. At $40,000 we’re still in the 15% tax bracket but more of our income is taxed at that rate. And the math looks more like $1,845 + ($21,550 x 15%) which works out to $1,845 + $3,232.50 = $5,077.50. That’s a $922.50 difference, almost a thousand dollars, on a technicality.

Though I’ve changed the numbers in the above example, this is exactly what happened to us. It was a dumb mistake. But in retrospect we walked into a well-hidden trap. The IRS tax withholding tables are nifty tools but they aren’t designed for people in our situation. The typical single-income breadwinner can fill out a W-4 in 30 seconds. Add up all your dependents, add yourself and your spouse (if you have one), sign at the bottom and move along. At the end of the year you’ll get a small refund and you’ll be on your merry way.

Multi-income households like mine are in a different boat, however. Since my employer doesn’t know my wife’s salary or vice-versa, they can only withhold income consistent with my individual projected tax rate. And if they do that, in the above example, I’d be short $922,50 at tax time. The only way to avoid this shortfall is if I instruct them differently. And that’s where form W-4 comes in.

Step by Step

Two earners or multiple jobs. If you have a working spouse or more than one job, figure the total number of allowances you are entitled to claim on all jobs using worksheets from only one Form W-4. Your withholding usually will be most accurate when all allowances are claimed on the Form W-4 for the highest paying job and zero allowances are claimed on the others.

This note appears at the top of Form W4 on the IRS website. Don’t miss it. And if you need help filling it out, check out Pub 505 for deeper instructions. The key part here is that form W-4 has two pages. The second page has a whole worksheet for married couples filing jointly. Using the example above, here’s how to use it:

Important! Use the instructions below to complete the W-4 for whichever spouse has the higher salary. The lower salary W-4 will simply claim zero allowances (enter 0 on line H and sign at the bottom).
  1. Calculate your normal withholding using lines A through G on page 1 of Form W4. Enter the total on line H and move to page 2.
  2. The Two-Earners/Multiple Jobs Worksheet helps you calculate how much additional should be withheld from your checks to ensure you don’t under-withhold. Enter your total from line H onto line 1 here.
  3. Have a look at Table 1, it looks something like this:

    Wages from lowest paying job Enter on Line 2 Above
    $0 to $6000 0
    $6001 to $14000 1
    $14001 to $25000 2

    Enter the number corresponding to the lower salary and enter it on line 2. Subtract line 2 from line 1.

    This is important

    • If line 1 is greater than or equal to line 2, enter the difference on line 3 here and page 1 line 5. This replaces the calculation you made in step 1. If you claim this number of allowances, the withholdings from this paycheck will cover your tax burden as long as your spouse’s W-4 claims zero allowances.
    • If line 2 is greater than line one, you have more work to do. Enter 0 one line 3 here and on page 1 line 5. This means that if you and your spouse both claim zero allowances on your W-4’s, you’ll still have a shortfall at the end of the year. Proceed to step 4.
  4. You’re on this step because page 2 line 2 is greater than page 2 line 1. For this step, subtract the larger number from the smaller one. Enter this on line 6. Now look up the higher of your two salaries on Table 2, it looks something like this:

    Wages from highest paying job Enter on Line 7 Above
    $0 to $75000 $610
    $75001 to $135000 $1010
    $135001 to $205000 $1130

    Enter the number corresponding to the difference onto line 7.

  5. Multiply line 6 times line 7. The product is how much additional tax you’ll need to withhold from your checks to cover your tax burden assuming you and your spouse both claims zero allowances. Lines 8 and 9 are used to calculate how much additional should be pulled from each check. Once you’ve calculated the correct amount per check, enter it on page 1 line 6.

  6. Sign form W-4 and return it to your human resources department.


In my example, my wife and I make the same salary. In this case, it doesn’t matter which of us has additional money pulled from our checks, so we’ll say that she’s claiming 0 allowances and I’ll have the additional pulled from my check. So let’s walk through the steps:

  1. My normal withholding is 1. Now I could claim 2 (one for me and one for my wife) but the W-4 instructions say explicitly:

    Enter “1” for your spouse. But, you may choose to enter “-0-” if you are married and have either a working spouse or more than one job. (Entering “-0-” may help you avoid having too little tax withheld.)

    I enter 1 onto line H.

  2. I enter 1 onto line 1.
  3. On Table 1, the lower income is between $14001 and $25000. So I enter 2 onto line 2. In this case line 2 (2) is greater than line 1(1). So I enter 0 on page 1 line 5 and move on to step 4.
  4. I subtract the larger number from the smaller 2 - 1 = 1 and enter that on line 6. On Table 2, the lower income is between $0 and $75000. So I enter $610 onto line 7.
  5. I multiply line 6 by line 7. That works out to $610 * 1 = $610.

    This means I need to withhold $610 more throughout the year in addition to my wife and I both claiming zero allowances. I have 22 more checks remaining this year. SO I need to have an additional $610/22 = $27.72 withheld from each check. I enter $27.72 on page line 6.

  6. I sign and return this to my human resources department.

A Final Note

Despite the gravity of our tax bill this year, we’re in a good position to cover it. We have an emergency fund for situations just like this. But it’s worth noting that things could have been much worse for us. We’re blessed in that we only owe additional taxes - but we were awfully close to owing penalties in excess of our tax bill. That’s because the IRS doesn’t like it when people habitually under-withhold towards their income taxes. In fact, you can be assessed a penalty if the tax you withheld in the current tax year is less than 90% of your total tax liability in the prior year.

So for example, if you owed $10,000 in taxes in 2014 and you under-withhold for your $12,000 tax bill in 2015, if your actual 2015 withholding is less than $9,000, you’ll owe a penalty to the IRS. Thankfully, we dodged that bullet.

To be safe, I’ll be checking our pay stubs in July to make sure that our tax withheld so far ties to our overall tax rate for the year. If your in a similar situation, I suggest you do the same.

Moved to Jekyll

Until recently, I paid $10 per month to host this site on Squarespace. Sadly, Squarespace was slow. Really slow. According to Pingdom, my site was 1.2mb large and took between 2-3 seconds to load. That was unacceptable.

I only host text here. No pictures. No music. Nothing. My entire site was only 10kb - so why did Squarespace need one hundred times that amount? The answer comes down to dynamic versus static web hosting.

Squarespace is a dynamic web host. Their server rebuilds each page on the fly for every user who requests it, and consumes a lot of bandwidth to boot. This approach is valuable for social media or news sites because everyone should see different information when visiting My site, on the other hand, doesn’t change that way. That’s why, this week, I moved to Amazon AWS.

Amazon AWS is a static web host. When I write a post, a program called Jekyll rebuilds the constituent files of my site and pushes them online. Instead of generating a new site for each visitor, AWS displays the same site for everybody.

I also only pay $1/month, a 90% savings.

So if you noticed a difference since your previous visit - that’s what happened.

Moving to the Cloud

For a long time I avoided web apps. I didn’t trust “the cloud”; and besides, they were buggy and feature-poor. I preferred using things the way they always had been: installed programs running on local hardware. But I’ve changed my mind on this one. And here’s why: Email

I use an email service called Fastmail. It’s the same as gmail, hotmail or yahoo except I pay for it. In exchange, Fastmail provides a zippy web interface, key shortcuts, and gigabytes of swiftly searchable storage. I can even drag and drop messages between folders. And when it’s time to archive my emails for later, Fastmail makes batch downloads painless.

A few months ago it occurred to me: no email client is this easy. I’ve used Outlook for work, Apple Mail at home and demoed numerous others. And they’re awful. I hate to admit it, but Apple Mail is probably the worst. It’s glitchy, slow, and has zero key shortcut support beyond basic file handling. Eight times out of ten it can’t even sync to my IMAP server.

Now I love Apple and have used their products for years. But this recent string of failures in my local software is swaying my opinion towards the cloud. There are two huge advantages to cloud software:

  • Continuous Development: it used to be that the best new features in software came during point releases. If you wanted the newest eye candy, search and backup — you went to the store and bought a DVD with the latest installation available. With web applications, the developers can push new features into the product seamlessly.
  • Portability: Web software is available wherever you have a browser. No need to run home or power on your laptop just to check your messages at the library. By running on any machine with a capable browser, web apps become a lot more flexible.

The biggest concern I have with web apps is security. If the data is stored in “the cloud”, I have no way to lock it down. I’m still uneasy about this - but simple logic justifies my position. Email is always stored on a third party server. Whether or not I use Apple Mail, Fastmail is still holding all of my messages. So there’s no security difference between the web app and otherwise.

So there you go. Suddenly I’m opening my eyes to the value in software as a service. I recently moved my budget into the cloud, I listen to Spotify more than my personal music collection, my emails already been there for a year now, and I’m depending more and more on dropbox.

I still have my concerns - and I hope that companies will not forsake local code entirely. But for the moment, I’m moving carefully into the cloud.

Review of Acorns app

I’ve been reading about Acorns, an iPhone app that helps people invest. “Round Ups”, it’s signature feature, rounds each of your connected bank transactions to the next dollar and deposits the extra in after-tax ETFs. The app is beautiful. And Acorns’ website presents animated charts, expert opinions and punchy copy to tout its advantages. But I’m dubious that Acorns is a wise investment option. Here’s why.

1. Not everyone should invest money

One of Acorns’ prominent marketing themes is that anyone can buy ETF’s because the app makes it easy. This line of thinking ignores the reality that not everyone should do so. There is a “right time” to invest money. You should have an emergency fund, be debt free, and consistently stick to a budget. Investments without this foundation introduce unnecessary risk to your life. Emergency funds will protect you from unforeseen expenses. You need a budget to efficiently pay the expenses you can foresee. And the interest you save being debt free will trump your gains in the market anyway. Every additional penny is better spent on these priorities until they are satisfied. You don’t plant Acorns until you feel the ground beneath your feet.

2. Why invest so little?

To get a better idea how much moolah Acorns could save, I scanned my bank statement from last month and rounded them. If Acorns had done this I would have invested ~$30 this month. That’s $360 per year. While this is a sweet chunk of change, it dwarfs when compared to the amount most people will need to retire, pay off their home or start a business. 30 years(!) of investment at this rate assuming a generous 10% return only yields $59,217.85. Those are impressive big bucks down the road, but I think most of us could do even better.

If you have already paid your debts, saved an emergency fund, and taken control of your spending with a budget - you are not the type of person asking yourself “how little money can I save?”. Instead, you habitually look for ways to save more money. So why stop at “Round Ups”? Why not tell Acorns to invest $200/month in lieu of the pocket change option? At that rate, the calculation above would yield $394,785.65 in 30 years. Now that’s more like it! But this bypasses Acorns’ killer “Round Up” feature. So why are we using the app? Why not open an E*Trade or Vanguard account with lower fees, more control, and proven customer service? You could even buy the same ETF’s that Acorns uses.

Still: it looks fun.

I’d prefer to see a service like Acorns that teaches users how to stretch their budgets in paying off debt. Round-Up until the debt is gone. Round-Up until the emergency fund is full. Round-Up until we know how to do that part on our own. And then set us free to find even more fun ways to invest our money.