I live in Oregon. I'm married with 2 kids, work part-time (husband works full-time), and I claimed 0
allowances on my w-4. My husband says that means less tax will be withheld from my paycheck so
I'll end up owing more when we file our taxes. Isn't the opposite actually true?
Also, would it be better for me to claim 1, 2, or even 3 allowances? --would I wind up with more money
in the end one of those ways or does it pretty much wash out even? Perhaps I should claim 1 or 2, so
my paycheck is a little bigger...
The fewer allowances you claim, the more that is withheld. So your husband has it backwards.
The reality of things is that most people want a generous refund. Even though they are giving an interest free loan to the government that was, its like a forced savings account for them with a windfall available at tax time.
However, I will tell you something that many people do not know yet. The IRS is putting together a new W4 that everyone will be required to fill out sometime in 2020. It will be nothing like the current W-4. It will be something like filling out a mini version of your taxes (including all income besides your wages) and your employer will be required to withhold tax based on the information that you provide. The idea is to put you at break even. There are some work arounds to allow people to ensure that they have a refund or generous refund, but its not going to be easy to figure them out at first.
I personally think the whole thing is incredibly stupid. The majority of people understand the current system and with just a bit of tweaking of the tax tables they could have corrected for the problems people encountered in 2018. On top of that most people will NOT want their employer to know how much their spouse makes or anything about whatever other income they might have.
However, its what the current government wants to see happen, so it looks like its going to happen.
