- Days left
how to minimize federal withholding from your paycheckThere may be a way to unlock some extra cash for the holidays right under your nose.

If you're getting a tax refund of more than $500 come springtime, it means you are giving the government an interest-free loan on your earnings. In 2011, more than 102 million people got average tax refunds of $2,805, according to the Internal Revenue Service.

While that's an excellent way to ensure you're saving some cash for big bills in 2012, you could plan to get a smaller refund and maximize your holiday-time paychecks instead. That could be the difference between staying debt-free and having a big credit card bill after the holidays.

This week, grab your your pay stub and W4 form, and find an online calculator to quickly re-examine the number of withholding allowances you're making and where you stand with your taxes. You might be able safely lower your withholding for December without creating a tax bill in the spring.

For example, if you are single and making $3,000 per month before taxes -- or $36,000 annually -- and have claimed no exemptions, then you're paying $391 in federal taxes every month, which is the maximum amount, according tax research specialist Lindsey Buchholz with H&R Block's Tax Institute.

But if you qualify for one exemption, that could add $46 more to your wallet. Two exemptions and that's almost $100 more a month. If you're single with two kids and haven't taken the maximum allowances, that could add up to an extra $185 in take-home pay.

She cautions that not everybody is in this boat. "If your situation is similar to last year and you got a bit of refund for 2010, then you can put more into your income," she says. But if you owed taxes last year, then don't cut your withholding, or you'll have a tax bill in April.

Revisiting your W4 is also especially critical if your circumstances changed this year. For example, you might have had a new baby, adopted a child, gotten married or divorced, or made new home purchase. Personal finance magazine Kiplinger's has a calculator that gives an estimate of what an additional allowance would mean for your take-home pay.

In one case I know of, a young guy, married in 2009 but with no children, realized months after starting a new job this year that his W4 had been mistakenly submitted as single with zero allowances. Using a worksheet, he figured out he qualified for at least two. That change boosted his monthly net income by 30% and allowed him to pay down high-interest credit-card debt left over from the wedding. Now, he also has a little more cash on holiday presents without sinking into more debt.

The more allowances you claim, the less tax is withheld. But again -- proceed with caution. This only works if you've been getting a nice-sized refund each year.

Check with your company's human resource department to make sure that your resubmitted form is processed as soon as possible to get the bump in your next few paychecks. If you want to return to higher withholding level at the start of 2012, you may have to submit another W4 after the new year.

Increase your money and finance knowledge from home

Goal Setting

Want to succeed? Then you need goals!

View Course »

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

TurboTax Articles

Employer Sponsored Health Coverage Explained

The Affordable Care Act, also known as Obamacare, is simpler than some people may give it credit for. The basic rule to remember is that everyone must carry Minimum Essential Coverage (MEC) or pay a penalty. Employers with 50 full-time employees or more are obligated to sponsor plans for their workers to help them meet this requirement.

How to Report RSUs or Stock Grants on Your Tax Return

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash. As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

What is a Schedule Q Form?

The Internal Revenue Service (IRS) has two very different forms that go by the name Schedule Q. One of them is for people who participate in certain real estate investments; this is known as a Form 1066 Schedule Q. The other Schedule Q deals with employer benefit plans. It?s not something an individual taxpayer would normally have to deal with, though a small business owner might need it.

Incentive Stock Options

Some employers use Incentive Stock Options (ISOs) as a way to attract and retain employees. While ISOs can offer a valuable opportunity to participate in your company's growth and profits, there are tax implications you should be aware of. We'll help you understand ISOs and fill you in on important timetables that affect your tax liability, so you can optimize the value of your ISOs.

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
Baby

Hey, I met a man who are 6'3" on a dating SITE-- Tal l H’U‘B. c○ m --.while, I am only 5'6" and I love tall guys. He said to me that tall girls on that site are seeking fun

with tall guys...Are you tall and like tall people, if so, go and check here~

January 04 2012 at 12:21 AM Report abuse rate up rate down Reply
cherry

You are not alone, find your soul mate on -- Tal lH UB. C○ m -- where many t al l s ingles who like dating and chatting there. I'm a tall girl from US, I also like dating with

t all guys on it. go on

December 30 2011 at 1:39 AM Report abuse rate up rate down Reply
intelligenceforrent

http://www.intelligenceforrent.com/

November 07 2011 at 7:40 PM Report abuse rate up rate down Reply
Jyjnhy

My best friend ,she just has announced her wedding with a millionaire old man Ronald who is the CEO of a MNC ! They met via ----SéêkSúɡárDαd.℃⊙M--.- ..it is the largest and best club for rich man date with young and beautiful woman and their admirers to chat online. …you don’t have to be rich there ,but you may meet one ,maybe you wanna check it out or tell your friends ! Giving the government an interest free loan is a patriotic thing to do .

November 03 2011 at 10:13 PM Report abuse rate up rate down Reply