I recall the first year my wife and I filed a joint return. I was a graduate student with a part-time job. She was fresh out of nursing school and employed at a local hospital. When we prepared our tax return, we owed $400. That was a lot of money in 1970, especially for people in our situation. What happened? We were victims of having multiple sources of income between the two of us and did not have the correct amounts withheld from our incomes.

When you become employed, you will be asked to complete a Form W-4, which instructs the employer to withhold income tax based on the number of allowances you select. The IRS publishes a guide to withholding and estimated taxes called Publication 505. It is a 61-page document that explains in detail the rules and guidance for completing Form W-4.

I’m about to fall asleep just thinking about how engrossing that reading must be.

To withhold the correct amount from your earnings, you need to understand how our income tax is structured. Our tax system is said to be a progressive one, meaning that higher levels of income are taxed at higher rates. For example, if your taxable income (married and filing jointly) is $50,000, $18,500 will be taxed at 10% and the remainder will be taxed at 15%. Every additional dollar of taxable income will be taxed at 15%, up to $75,300. Your highest bracket is known as your marginal rate. But now let’s say your spouse goes to work, increasing your taxable income to $100,000. That additional income is subject to the marginal rate. So it is subject to 15% and 25% rates. At $50,000 taxable income, your tax would be $6,573. When that income jumps to $100,000, the tax liability goes to $15,338. None of the new income is taxed at ten percent.

The same dynamic is in play if you have more than one employer. So with progressive tax rates each dollar of income is taxed at a higher rate than previous earnings. The maximum rate is currently 39.6%.

Let’s go back now to the W-4. Assuming no complicating factors in your tax situation such as credits, dependents, or other income, you and your spouse are entitled to two withholding allowances between you. One of you could take two, while the other takes zero allowances. Or you could split them one each. One word of caution here is that if one spouse has a significantly larger income, that spouse should probably claim zero exemptions to assure an adequate amount is withheld during the year. When my wife and I had to pay in that first year each of us claimed two exemptions so we under withheld in that year.

What I have presented is a simple case. Unfortunately, life is not that simple. You may have some tax credits, itemized deductions, additional dependents, capital gains or losses, income not subject to withholding—all of which affect your ultimate tax liability. Most tax programs today have a worksheet in which you can input estimated tax data for the coming year to determine your estimated liability. Subtract your anticipated withholding for the year from this amount to see if there is an anticipated refund or amount owed. You can them adjust your withholding allowances to help assure that there are no surprises come tax time. You may adjust your withholding at any time and as many times as you need to during the year. Just file a new Form W-4 with your employer.