Afraid that you'll just fritter away the money if you actually get your hands on it? Direct deposit your check and have the amount that had been going to payroll taxes automatically put into a savings account. It'll be just like before, only now you'll be getting interest on your earnings. Bankrate's search pages can help you find the best rates on money market accounts or certificates of deposit.

You also could use your extra paycheck money to increase your 401(k) contributions (do it while you're in your payroll office changing your W-4) or set up automatic payments to your credit card accounts.

2. Underwithholding is bad
OK, you're persuaded that having too much withheld in payroll taxes is bad. Well, going too far in the other direction is not a good move either.

Our tax system is a pay-as-you-earn one, meaning the IRS expects to get its money from you as you earn it regularly throughout the year. When you don't pay up this way, you could face penalties and interest charges for underwithholding.

As you did to correct overwithholding, adjust the amount of taxes taken from your check to ensure that you pay enough.

You also might need to fine-tune your workplace W-4 if you have other income that's not subject to withholding. This could be interest income, property that you sold for a profit or income from a part-time cash-payment job. This extra withholding will help cover taxes on that money so that you don't have to come up with quarterly estimated tax payments.

3. Tips to differentiating your income
You might view your income as one figure, but in the eyes of the IRS it has several incarnations, and each plays a part in arriving at your ultimate tax bill.

You start with your gross income, which is, basically, everything of value you got during the year. This includes your salary, as well as investment income, any prizes or awards you won, even the value of bartered goods or services you received.

Once you have that amount, you might be eligible, depending on which tax form you file, to reduce it. You can find the most ways to cut your gross income at the bottom of Page 1 of Form 1040, although the shorter 1040A also has a few.

After you subtract as many of these allowable amounts as you can, you'll have your adjusted gross income, or AGI. Your AGI is significant because it generally determines whether you're eligible for additional tax breaks. If your AGI exceeds the specific limit for a tax break, you can't claim it.

Finally there's your taxable income. You reduce your AGI further by subtracting your personal exemption amount and deductions, either standard or itemized. The result is your taxable income, the actual figure upon which your tax liability is based.

4. Different dollars have different rates
You've figured out your taxable income. The next, and biggest, question is: How much in taxes will this amount cost you?

You already know that there are different tax rates, currently six ranging from 10 percent to 35 percent. And you probably say you're in, for example, the 25-percent tax bracket because your $50,000 salary falls into the earnings rate covered by that rate.