Would adding my spouse as a dependent decrease the amount of taxes withheld from my paycheck?

Would adding my spouse as a dependent decrease the amount of taxes withheld from my paycheck?

by Neil Dierolf, CPA | Aug 15, 2019

If I were to add my spouse as a dependent, would the amount of taxes taken out of my paycheck decrease?

The amount of federal tax withheld from your paycheck is determined by how you filled out your IRS Form W-4 when you were hired. Major factors that affect your withholding are whether you live in a "two-earner" household and how many "allowances" you claim. Allowances can be claimed for situations such as being married or having dependents. Total allowances are calculated using the "Personal Allowances Worksheet" on page 3 of Form W-4. If you and your spouse both work, you may also need to fill out the "Two-Earners/Multiple Jobs Worksheet" on page 4.

Claiming more allowances will typically result in less tax being withheld from your paycheck. However, it is important to remember that the amount of withholding impacts the net result on an income tax return (refund or balance due). The IRS also notes that taxpayers are not required to complete the allowance worksheet or reduce withholding if they do not wish to do so. 

The IRS encourages employees to consider completing a new Form W-4 each year or when your personal or financial situation changes.In fact, because of the tax changes, the IRS just recently released a new W-4 and this CPA Now blog explains how to complete it, but  be sure to consult your tax adviser if you are not sure of the best way to fill out this form for your situation. The blog also provides access to the IRS withholding calculator.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: Neil Dierolf, CPA, is a staff accountant with Wouch Maloney & Co. LLP in Horsham, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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