Taxes:Are we doing this right?

You can't claim allowances and claim EXEMPT at the same time. Someone has messed up in your Payroll Department. You don't provide enough information to determine if you can claim EXEMPT from Federal withholding.

You can ONLY claim EXEMPT if you had $0 tax liability for 2007 AND reasonably expect to have $0 tax liability for 2008.

You may or may not be OK claiming EXEMPT or claiming the allowances stated, but you have not provided enough information to make an educated guess on that.

I'd worry about that exempt part - I'm guessing that's for state, the number is federal. If that's what it is, then it depends on your state whether exempt is correct.

Ask your payroll department what the number and the "exempt" means. If you are exempt for federal for example, there isn't a number for federal.

Your husband is claiming three exemptions, two children and himself.

OK

You are claiming none. This should result in a refund on your taxes, or jointly.

Ask yourself if you need that cushion.

Otherwise you are loaning money to the IRS for a year.

You have four exemtions to put down if you want to claim them all year. You can leave it the way it is and get back more money at the end of the year. There really is no right or wrong unless you claimed more than 4.