I originally filled in my W-4 with "1" for items A, B and C of the "Personal Allowances Worksheet" since my wife wasn't working and I have only one job and we're filing jointly.
A Enter “1” for yourself if no one else can claim you as a dependent
B Enter “1” if:
• You are single and have only one job; or
• You are married, have only one job, and your spouse does not work; or
• Your wages from a second job or your spouse’s wages (or the total of both) are $1,500 or less.
C 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.)
However, my wife started working around July and she has very variable income. I am trying to work out our estimated taxes due to her new jobs using form 1040 ES. On the "2016 Estimated Tax Worksheet", item 4 (exemptions) it says:
4 Exemptions. Multiply $4,050 by the number of personal exemptions. Caution: See Worksheet 2-6 in Pub. 505 to figure the amount to enter if line 1 is over: $155,650
So originally this would be
3*4,050 but now that she has a job I would mark 0 on items B and C on the W-4 and this amount will be only
4,050 (our joint salaries is below $155,650).
When I file my income tax for 2016, should I consider one exemption or three exemptions?
If I consider one exemption, and considering my wife made LESS than the exemption amount we're not being granted due to the fact that she worked in 2016 (i.e. items A and B on the W-4:
2*4,050=8,100), does that mean we have to pay more taxes than what she earned, and in the end she might as well have stayed at home?