re: Tax Allowances

This seemingly simple topic is one that is fraught with potential pitfalls. Every dollar your wife earns will be subject to tax at your married filing joint marginal tax rate. Some of the income she earns will be subjected to withholding to use the 10% and 15% tax brackets that your withholding also uses. So you could end up with 2 times the amounts of withholding made with respect to those brackets as you should.

Your wife's income could require you to increase the amount being withheld in order to avoid an underpayment. Much depends on your income levels and your marginal tax bracket.