Tax Withholding – Are you Paying the Right Amount?

Becky House — Tue, 15 Sep 2009 22:38:47 +0000

Everyone knows if you don’t pay enough in taxes throughout the year, you may end up owing money when you file your taxes. On the other hand, if you pay too much in taxes, you’ll receive a refund. Refunds are always fun, but for some having that money now would be more beneficial.

You can check whether your tax withholding level is too low or too high by going to http://www.irs.gov and searching for withholding calculator. Enter your information and the program will show you the recommended number of deductions to claim based on your situation.

The information you provide is anonymous and is discarded when you exit the program.

A Simple Way To Put More Cash In Your Monthly Budget

Angelique Knapp — Sun, 15 Feb 2009 21:49:00 +0000

When counseling clients, I often hear statements like, “I am going to pay off my debt with my tax refund.” This is a noble idea and I fully support paying off debt in any way possible!
The problem, however, is that the clients making these statements are often struggling with month to month bills- keeping the mortgage or rent current, utilities caught up, even food on the table. It is not unusual for the clients to tell me that they typically receive $1000, $2000, even one client, $7000, in tax refunds annually!

It certainly is nice to receive a large lump sum, BUT if you are struggling to make ends meet, does it make sense to be giving the government all of those dollars each month when you can be using them to make your daily life easier and more stress free?

A $2,500 IRS refund may equate to $200 MORE each month that you could use to pay monthly bills. My personal goal is to always have my tax liability at the end of the year somewhere within a $200 window- not owing more than $100 or receiving a refund of more than $100. Doing so allows me to keep and use as much monthly income in my budget as possible.

It is really easy to calculate your withholding in order to maximize your monthly income. The IRS has a great calculator which will show how you can adjust your W-4 to give you the most monthly income available; down to as little as a $25 year end refund. Go to http://www.mymoney.gov/and click on Budgeting and Taxes or vistit the IRS website.

“Intaxication: Euphoria at getting a refund from the IRS, which lasts until you realize it was your money to start with.” ~Author unknown, from a Washington Post word contest

By Steve Axtell

My Financial Goals » tax refund

Tax Withholding – Are you Paying the Right Amount?

A Simple Way To Put More Cash In Your Monthly Budget