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Bible Money Adjusting Your Paycheck Tax Matters FREE Withholding To Keep More Money In Newsletter Your Bank Account
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here are a few things that are certain in life, however, there are at least 2 things we can all count on:
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A few people I know actually look forward to doing their taxes every year because they SIGN UP NOW know they'll be getting a giant refund. For example, one friend just received a $3000 refund, and he's been banking on getting that refund for some time to make some repairs around the house.
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Is it wise to depend upon a large refund every year like he does, or should he be
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adjusting his withholding on his paycheck, and getting more money in his account up
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My feelings on the issue are this; Why give an interest free loan to the government every year when you could be keeping that money for yourself, and even earning some interest on it?
How Do You know You Need To Adjust Your Withholding? How do you know if you're withholding too much on your taxes every year?
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If you're consistently getting large refunds, like my friend who got an expected $3000 check, you're probably withholding too much. If your situation has changed, like you've gotten a divorce, you may need to adjust your withholding. What other situations will necessitate a change in your withholding, either up or down? If you recently got married. You got divorced.
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You had a baby. You bought a house. You have new separate non-wage income and you want your withholding increased to account for it.
How To Adjust Your Withholding To adjust your withholding is a pretty simple process. You need to submit a new W-4 to your employer, giving the new amounts to be withheld. If too much tax is being taken from your paycheck, increase the number of allowances on your W-4. If too little is being taken, decrease the allowed amount. You can usually get a new copy of the W-4 form from your HR or payroll department, or simply grab it from the IRS website (W-4 Form) and fill it out on your own. Not sure how much you should be withholding? You can go to the IRS website and they have a withholding calculator where you can figure out what you should be withholding.
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So the easy 1-2-3 step process is: 1. Figure out your new withholding on through the IRS's withholding calculator. 2. Get a new W-4 Form and fill it out. 3. Submit your new W-4 to your payroll department. If you were having too much withheld, you just gave yourself an instant pay raise! Be careful, however, if you withhold too much you may find yourself with a nasty little tax bill at the end of the year, and scrambling to file for an extension!
Dave Ramsey On Adjusting Your Withholding Here's a discussion that Dave Ramsey had with a caller on his show recently about adjusting tax withholdings. Dave Ramsey on Withholding Are you withholding too much onyour paycheck? Are you considering filling out a new W-4 to give yourself a pay raise? Do you prefer getting a large refund at the end of the year?
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Last Edited: 17th November 2017 The content of biblemoneymatters.com is for general information purposes only and does not constitute professional advice. Visitors to biblemoneymatters.com should not act upon the content or information without first seeking appropriate professional advice. In accordance with the latest FTC guidelines, we declare that we have a financial relationship with every company mentioned on this site.
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About Peter Anderson Peter Anderson is a Christian, husband to his beautiful wife Maria, and father to his little boy, Carter. He loves reading and writing about personal finance, and also enjoys a good board game every now and again. You can find out more about him on the about page. Don’t forget to say hi on Google +, Pinterest, Twitter or Facebook!
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Travis @ CMM says I changed my withholding to 2 last year, and my wife claimed 0. Well this year we got back a whopping $3 refund. I’m happy we didn’t give the government a loan like you described, and I was pleased because we put that money towards paying off debt. But its hard to be happy around this time of year when you hear everyone else getting thousand dollar refunds. Reply
Phi says Our return this year was about $6k; more than ever before. It was due to a combination of things so we thought it was time to take the dollars up front as of February. I changed my witholding from 1 to 6 (my wife doesn’t work) and love getting the extra $175/month more. Plus, we’ve left ourselves enough cushion so that we’ll probably get a reasonable return next year. Don’t mind lending a little to the gov’t but would be horrified to end of paying anything around April 15th. And this way we get a small treat around tax time! Reply
Aris says I want to learn from you! lol Teach me this sorcery. :P Seriously though. This tax stuff has always been way over my head. Im over here trying to look up various articles about it all but Im finding myself running around in circles with it. Maybe I should just go to a tax place and they can give me the run down on it all. Anyway, great job with everything! Reply
Philip says Dont pay for someone to do your taxes.. go to: https://www.irs.gov/individuals/irs-withholding-calculator http://www.moneychimp.com/features/tax_calculator.htm If you do not know after this 2 sites … well, then you should pay for someone hehehe! Reply
Angie says I know that on PF blogs it is tantamount to sacrilage to admit that I enjoy getting a large refund, but the fact is, I do! DH and I find it challenging to save small amounts of money. I know what we should do, and we are diligent in most areas of our financial lives (no debt but mortgage, almost maxed on the 401k…), but if we changed our withholdings we would likely spend the extra money on more expensive date nights, more junk for the kids or fritter it away on something else. Getting back a big return is what has helped us truly pad our savings account. I know in my head that this is an interest free loan to the government, but if you figure that I would be earning 3% interest on $200 per month, I am willing to pay a $39 stupid tax to ensure that I am not foolish with the $2400 we’d get back. That’s my two cents anyways. PS – first time I’ve stumbled on your blog – can’t wait to read more! Reply
Kate says Thank you so much for posting this! My husband and I will owe on our taxes this year because it looks like they didn’t withhold enough from his taxes each pay period, so we’re bummed. But, when you described it as an “interest free loan” to the government, I do feel a little better now. Good to know that we can make these small changes to our tax forms during the year to effect the final outcome each April– that’s the power of small for you! Kates last blog post..Stains the World Famous Cupcake Dog Reply
Jade says I claim single and none, with an extra $20 taken out of each check. (I get paid twice a month.) My employer insists that I am not entitled to the complete federal stimulus refund b/c I have the extra money taken out. Based on my salary, I should get $400 for the entire year, but so far each check has only been an increase of $1.86. It’s almost as though the extra money is being taken out of my base slaary and then again out of the stimulus. I know of others who work elsewhere and claim the same as I with the extra taken out, and they received around $10 stimulus for a weekly check. How can I get the payroll dept to undertsand my position? Any advice? Reply
Jeremy Walter says I heard the analogy of getting a big tax refund being similar to letting your neighbor borrow a gardening tool. You give it to him and he returns it to you next year, except that now the tool is rusty, makes some funny noises, and doesn’t quite do as excellent of a job as it once did. Same with letting the gov’t borrow money for a year – with an increasing cost of living (inflation) averaging about 3% over the long haul, what one dollar buys one year may not buy the same amount the next year. If this is the only possibly way that some people can, then I’m ok with it. But as a financial advisor, I really try to get clients to save the weekly/monthly dollar amount difference that can be adjusted from their withholding into a savings account somewhere. Reply
Derek Sisterhen | Past Due Radio says Hey Peter, Great post and thanks for the link to the IRS Withholding Calculator. I see this problem over and over and over again. Folks will be struggling to make ends meet and start dumping debt, then they get a $6,000 tax refund. That’s $500 a month they were missing out on throughout the year! I think taxes bother us so much that we just want to get them over with, and we don’t necessarily look at the situation to determine if we could do something different for our own benefit. Reply
Peter Anderson says Ralph, I’m not sure why you’re taking issue with the article? You’d be surprised at how many people actually need advice on how to adjust their withholding, it may seem common sense to some folks like you, but others who don’t deal with taxes all the time sometimes need a couple of pointers on how to follow through with something like this. I’m also not sure why you take issue with the audio from Dave Ramsey talking about adjusting withholding. I thought it was pertinent to the issue at hand, and I agree with the advice he gives? thanks for stopping by.. Reply
Karie Johnson says Hello, My husband sometimes has his boss take no taxes out of his check without filing a w-4. They only take out for FICA. I always though that you needed to fill out a new w-4 with more dependents to get more money from your pay check. Can you tell me if what his boss is doing the right way to do this. We are taking a vacation soon and wanted to have some extra spending money. We do not see eye to eye on this. Can you give me an answer. Sincerely, Karie Johnson Reply
franz says The fact is.it is UN constitutional to charge income tax..AND there is NO law that says to have to.unless it’s been changed recently..A few years ago, someone challenged an IRS agent to find a law that says you have to pay income tax..they and other agents could NOT find one..so WHY?? are we giving money to this EXTREMELY CORRUPT Federal Reserve..that is NOT a government agency, but a cartel of private banks? These ZIONISTS are perhaps the most evil and corrupt people in history and MUST be exposed for what they do..The ROTHSCHILDS ZIONISTS are at the head of the table as they own/run nearly every western bank and are worth about 500 TRILLION..and likely have the most gold that they printed money for you in return..Gold for paper..HUGE interest on the money these banks print..plus cost of course..Most of us thought the government printed the money..nope..The creation of the FED has sunk our country and kept us slaves to these banking cartels who have their hands in everything..They have even created wars in order to lend money to Kings, Queens and governments and profit from HUGE interest by the blood of the people who fight and die..THEY also own the media..Rothschilds own AP and Reuters..THE source for all western Zionist owned media..and will use propaganda to perpetuate fear and hatred..thus justifying invasions and the murder of innocent people..as well as raping their countries resources of Oil, gold, minerals etc. WE should STOP paying income taxes..take your money out of their banks and expose these SCUM. Reply
Danielle Berry says Well why is it that I myself as a single person with no children pay about $150 each check in taxes then when tax season comes I only get $500 back that’s ridiculous. The persons with no job and about 10 kids (overly exaggerating) do their taxes and get back thousands of dollars when they haven’t paid a thing throughout the year. And it’s the government that’s taking care of them and their children, well really is tax payers. Can somebody please make some of that sense up to us. Reply
Luis Fernando says It’s Tax Credit for each child. Each child get’s Tax credit of $1000 – $2000 per child. Reply
Sarah Ford says I need help to figure out how to get less taken out of my paycheck right now I think I’m claiming to but when my paycheck gross is 1500 I only take home about 1200 so how do I make it more I’m taking home do I claim more than two on my W-4 I need to know I need to turn it in by tomorrow Thursday, June 1 if you can Give me advice that will be amazing thank you Reply
Jeff Campbell says Love the post and would like to share it but just wanted to point out the typo in the headline. Adjusting is missing the “j”. Thanks Jeff Reply
Peter Anderson says Wow, thanks for pointing that out. Not sure how I missed that for so long. I believe it should be fixed now. Reply
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