March 25, 2013
Should You Adjust Your Tax Withholding?
Learn which factors indicate that you should adjust your tax withholding.
It's hard to know exactly how much tax you'll owe unless your income and family situation are identical from year to year. But if you consistently get big refunds, you're essentially giving the government an interest-free loan all year. And if your withholding is too low, you could be subject to interest and penalties.
If you're overpaying or underpaying taxes, adjust your tax withholding by filing a new IRS W-4 Form with your employer. You should also recalibrate your withholding whenever your income or family situation changes – say you get married or divorced, have a baby or buy a home. The form contains worksheets that can help with the calculations.
Bottom line: It's your hard-earned money, so make sure you're not giving the government too much – or too little.
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