I find that the IRS calculator can be very confusing. The best way is to estimate your entire year's income:
142,000
34,000
=======
176,000
You should actually subtract 401k, health insurance, FSA from those numbers, but you didn't so I'll just use them.
Subtract the $12,600 standard deduction, or the total of your itemized deductions if higher.
Subtract 2 x $4,050 personal exemptions
=======
155,300
This is your taxable income. Use the tax brackets to work out the tax on this amount.
http://time.com/money/4082533/irs-new-tax-rates-standard-deductions-exemptions-2016/
(155,300 - 151,900) x 0.28 + 29,517.50 = 30,469.50
That's your target of how much tax you want withheld from both of your paychecks for the whole year. You could simply divide by 26 = 1,171.90 and make sure the tax withheld from both of your paychecks is close to this amount. You could also change your W-4 allowances and wait to see what effect it has on your paycheck.
Or you could use a paycheck calculator like
http://www.paycheckcity.com/calculator/salary/ and just play around with the allowances.
With that one, when you add deductions at the bottom, note that:
- 401k is exempt from federal, but not FICA. State and local I don't know.
- Health insurance and FSA are exempt from federal and FICA.
The most hardcore method is in IRS Publication 15, Section 17. How To Use the Income Tax Withholding Tables, Percentage Method on p 42.
https://www.irs.gov/pub/irs-pdf/p15.pdf
I'll do an example using Table 2 for biweekly paychecks on p 44.
Say you both claim married and 0 allowances on your W-4.
142,000 / 26 = 5,461.54 biweekly
Then subtract 155.80 x # of allowances (Table 5 p 42). In this case, 0.
Using Table 2, (5,461.54 - 3,225) x 0.25 + 398.75 = 957.89
x 26 = 24,905.14 annual tax withheld
34,000 / 26 = 1,307.69
(1,307.69 - 1,042) x 0.15 + 71.30 = 111.15
x 26 = 2,889.90
24,905.14
+2,889.90
=========
27,795.04 tax withheld
But remember right from the beginning, your annual tax bill target was 30,469.50, so if you claim married even with 0 allowances, you will owe 2,674.46 on your tax return! That's why I think the IRS calculator was wrong to tell you to claim 2 allowances + $87. That would make you owe even more. You could still claim married with 0 allowances, but then you should withhold an additional $51 x 2 x 26 on both of your paychecks to make up $2,652.
When both spouses work, I usually recommend to check the box on Form W-4 that says "Married, but withhold at higher Single rate", but this works best when both spouses make around the same. Your incomes are very different. You can still both claim single and play around with the allowances until you get close to the target though. I think 3-4 each should do it.
