If you’re like most people, you look at your paycheck with sadness when you see how much is taken away before you even get it. I will bet that you are frustrated that you have to wait until tax time to get your money. Did you know that you could fix it so that you got more of your money during the year? You can. All you have to do is adjust your withholding throughout the year. We’ll look at this in a little more detail in the rest of this article.
When you first started your job you filled out a form called a W-4. This form determines how much is taken out of your paycheck every pay period. Most people usually don’t give much thought to this. They just fill it out and go on about their day. However, if you want more money during the year instead of when you file your taxes, you have to adjust your withholding. Basically it goes like this. If you have too much withheld then you won’t be able to use your money until you get your tax refund. If you don’t have enough withheld then you will wind up owing money when you file your taxes. If this sounds confusing to you, don’t worry. There’s a publication on the Internal Revenue Service website (Pub 919) that includes a worksheet and full instruction so you can calculate the correct amount to withhold from your check.
I know doing all of these calculations may seem like a lot of work. However, if you get more money in your check during the year, you have more time to make your money work for you. Keep in mind that this is your money. If you get more money during the year, you will be able to invest more money in your savings and stock portfolio during the year. Take a few minutes to review your withholding today. Your wallet will be glad you did.