Payroll withholding is something every taxpayer needs to get just right. Why?
What’s wrong with getting a refund? You’ve given the IRS free use of your money, which you could have put to better use yourself throughout the year.
For example, you could earn interest in a high-yielding certificate of deposit. Compare CD rates at Bankrate.
The best course, tax experts say, is to adjust your withholding so your tax payments in our pay-as-you-earn tax system will match your actual tax liability.
To make any change, file a new form W-4 with your employer. This will change the amount that comes out of your paycheck.
If you owe the IRS:
If you regularly get a big refund:
You should adjust your withholding any time there’s a major change in your life — such as if you marry, welcome a child into your family or buy a home. Each of these circumstances can affect the amount of tax you’ll owe.
See how the number of allowances affects your take-home pay with Bankrate’s hourly paycheck calculator.