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It is a good idea to have your withholding not be much larger than the income tax due for the year. Although some people like to use tax withholding as a sort of a savings account and get a large refund when they file; there is no interest paid on tax withholding and the money is not available until you file your tax return (no matter how badly you need it.)
So long as you do not owe more than $1,000 when you file your tax return there is no penalty for underpayment.
A single person can indeed use 2 or 3 or 1 allowance on their Form W-4.
Hope this fully answers the question.