Filing Status Implications

• Before filling out a W-4 form, understand the tax implications of each filing status. When you file a joint return with your husband, the IRS allows you to claim the largest standard deduction and two exemptions and imposes lower rates of tax on your joint income. In contrast, when you file separately from your husband, you are subject to higher rates of tax on your separate income, report one exemption and can only claim a standard deduction that is half the amount available to joint filers. As a result of filing separately, more money must be withheld from your paychecks to pay a sufficient amount of estimated income tax during the year.
  
  

Claiming Allowances

• The IRS provides a formula that employers use to calculate the precise amount of money to withhold from your paycheck. The amount takes into account your annual salary and the number of allowances you claim on a W-4 form. The more allowances you claim, the less your employer will withhold. For example, the W-4 form includes a personal allowance worksheet that instructs you to claim one allowance for yourself and one for your husband. However, if you file separately, you shouldn’t claim the allowance for your husband since he must also file a separate return. As a result of the higher amount of tax you will pay on your separate income, claiming only one allowance will increase your tax withholding.
  
  

Claiming Your Children

• All W-4 forms allow you to claim additional allowances for each child you report as a dependent. A dependent exemptions is similar to a deduction, but is fixed in amount by the government each year. Each dependent allowance you claim will reduce your withholding even more. If you are filing a separate return from your husband, it’s important that you both agree on who will be claiming the dependent exemptions for your children. If you both increase your allowances for the same children, you both may inadvertently underpay your estimated taxes and incur a tax penalty for doing so.
  
  

Allowances for Itemizing

• When you choose to itemize deductions, you need to estimate the amount by which it will exceed the standard deduction and report it on your W-4 form to decrease your withholding. If you and your husband consistently claim itemized expenses, you can calculate the difference using a prior return. However, if you file separately, and your husband itemizes on his return, you cannot itemize or even claim the standard deduction on your own return.