You should find out what the withholding requirements are. Generally, if you withhold as much as you owed the previous year, you're not liable for a penalty.

Once you know how much you need to pay in withheld taxes to avoid a penalty, ask your payroll office to calculate for you how many exemptions are needed to result in withholding the amount that you need.

If you work for someone else you can ask your HR person. They can run numbers for you.

Good luck!

Some state and local W-4 forms have a worksheet that allows for a calculation of additional allowances based on the amount of itemized deductions in excess of the standard deduction. However, there may be adjustments that are specific to the state or local authority.

Trial and error is also another good method. If you find yourself getting large tax refunds back at the end of the year, you may want to adjust your withholdings in order to keep more money in your pocket every month instead of giving Uncle Sam an interest free loan.