Skip the Refund and Have More Money For Credit Card Bills
Sure, it’s great to get a big, fat tax refund all at once every year – but if you’re struggling to pay your bills and credit card debt year round you should make some changes. Many people leave their tax withholdings set up purposely to get the refund after filing their tax return – sort of like a savings account or vacation fund. The problem is you’re giving the IRS a tax-free loan, that could better be put to use paying your debts throughout the course of the year.
Surely there is no one who would prefer to PAY the IRS at tax time, so it’s better to get the refund. With some careful adjustments, however, you can reduce the size of the refund and see more in your check throughout the year (without danger of having to pay at tax time).
Visit your human resources or accounting department at your place of employment. Ask to look at your w-4 to see what your withholdings are. If you’re getting a large refund, you can increase the number of withholding allowances you claim. The payroll people should be able to help you find the break-even point; and show you how much more you would get in each paycheck throughout the year rather than waiting to get it all at tax time.
