Get more money in your pocket NOW
As anyone who has read my posts here in the past will know, I am vehemently against the concept of an income tax. However, I am a firm believer in following the law and paying my taxes on time and in full while the income tax does exist. But I am also continually looking to minimize my tax burden and maximize my take-home pay.
Today, too many people see their tax refund in February or May or whenever they get it as a bonus from the government for being good little taxpayers. It is NOT. It is the return of YOUR MONEY that you loaned to the government interest free for the entire year. I don’t know about you, but I don’t like the idea of loaning the government my money without receiving a dime in return.
Yesterday I read an article that detailed an IRS Withholding Calculator website that allows you to input your expected income for the year, the taxes you’ve already had withheld from your paychecks, and get back the amount of taxes you should expect to pay for the year.
But more importantly, it also tells you how many withholding allowances you should put on your W-4 to maximize your paycheck for the rest of 2008.
Keep in mind that this will reduce your refund at tax time next year, but with the benefit of increasing your take-home pay today.
To give you an indication of what the IRS Withholding Calculator can do for you, it told me to claim 8 withholding allowances to reduce my tax burden for the rest of 2008 in order to increase my bottom line today.
With 8 withholding allowances, my paycheck will be $300 more every two weeks!
Give it a try and post back here how much you will save on your taxes.
If you enjoyed this post, please consider to leave a comment or subscribe to the feed and get future articles delivered to your feed reader.
Just be really careful to watch out for the income limits on withholding. Above a certain income level the IRS requires that you withhold 110% of last year’s total tax due or you’ll incur an underpayment penalty. If there’s any doubt, consult your tax adviser before changing your withholding.