I am married and filing jointly for our 2010 taxes, I have 2 children, but I am going to end up owing 500 to f?

I would adjust my W-4 so that I owe about $100 to both the state and federal. Getting a refund is like giving the government an interest free loan until they want to pay it back. If you do it this way, put the money in a bank or save it somehow in case you owe money for taxes. This way you take home your refund each week instead of getting it in a lump sum in Feb or later.