So I have six children and because I get $2k per child I am getting $12k this year. Last year when I did my taxes I overpaid by $2k and with one less child I got about $9K between Fed/State. This year it shows I underpaid by about $2k but because of the $12K my refund is about $10K.

My question is do I keep raising my W4 exemptions until I get close to no refund (and if so, will I get in trouble because my underpayment will keep going up or the fact that I am not allowed to just willy-nilly increase it) or should I just get my taxes withdrawn so I end up paying exactly what I should and just take the $12K refund?

My W4 exemptions last year was 7 when I overpaid by $2k (with 5 children) and end of last year we had our sixth child and didn't change it until early January this year. I increased it to 8, then 9, and finally 11 thinking my checks will get bigger (about $40 over two weeks with the 9 though I don't know what my 11 exemption will be yet since I just updated it a few weeks ago)

I am already underpaying with an exemption of 7 at this point so I can drop it down to 5 and not owe anything in taxes and get the $12K or sit tight with 11 or keep increasing it. What is the right thing to do?

yes; You may prepare or update a W-4 anytime during the year however, basically, to help you calculate the right number of allowances, you may use the IRS W4 Personal Allowances Worksheet. You can find this and other worksheets in the same packet as the actual Form W-4. However, the worksheets are only for your personal use. You don?t need to submit them to your employer.The W4 form and the allowances you claim on it can make a big difference in your financial life. as you can see, each allowance you claim will reduce the amount withheld from your paychecks. the most logical approach to determining how many allowances to claim on your W4 is to get as close as possible to having your total tax due for the year automatically withheld. Having too much withheld and then getting a hefty refund is exciting, but it really means you lent money to the IRS interest free during the year. Having too little withheld will mean you'll have to come up with whatever is due, which isn't always easy. In addition, if you underpay your taxes too much, you may have to pay a penalty charge and possibly interest, too. You can use your results from this Calculator to help you complete a new Form W-4

https://apps.irs.gov/app/withholdingcalculator/