Have you started thinking about taxes yet? \u00a0I know it is the dreadful thing that we would like to avoid, but they say that taxes are one of the two certain things in life.<\/p>\n
Many will begin getting W2 statements this month along with the 1099’s and all the other documents to begin preparation for our 2011 tax filing window. \u00a0With that filing, many of you will get a refund of the taxes you have overpaid through the year.<\/p>\n
That overpayment, from each one of your paychecks, is money you could have used to buy food, pay utilities, save for a car, save for a vacation, fund your retirement account, etc. \u00a0But no, your money has been held by the US Treasury to make sure you had enough for your tax obligation.<\/p>\n
Did you know you can better manage the amount of money that you do have withheld from your paychecks? \u00a0You can go online (see below) to the the IRS, fill out all the questions, hit enter and learn what you should be claiming as true exemptions. \u00a0By making the changes on your W4 and submitting to your employer, you can begin bringing home more of your money to manage to your plan each month.<\/p>\n
Likewise, if you find yourself owing each month you can use the tool to determine how to correctly withhhold to avoid owing the IRS each year.<\/p>\n
Two things to keep in mind. \u00a0First, an exemption is NOT the same as a deduction. \u00a0You should not have the same number of your dependents as your exemptions unless you run the program to suggest that. \u00a0Some people decide that since they have five in the house that their exemptions should be five. \u00a0That is not necessarily the case.<\/p>\n
Second, this tool is not fail proof. \u00a0Your have to enter as correct of numbers (projections for this year) as you can and if your numbers change during this year, you may need to re-do the whole task. \u00a0The IRS and their programmers are not as perfect as we would like.<\/p>\n