Give Yourself a Raise

The year is almost half over. Now is the time to check in to see if your withholding is on track.  Did you get a refund last year? If so, you are probably on track to get one this year as well. For most people, one tax year looks pretty much like the rest. Do you realize that the refund is your money and that you are giving the government an interest free loan? 

Some people like the enforced savings. However, you can put the money in your bank account instead of Uncle Sam's.  This is very easy to do. Simply ask your HR person for a new form W-4 to complete. Increase the number of exemptions you claim. How you get to the number is not important, so don't worry about the worksheet at the top of the form.  Just know this: the higher the number, the less taxes they take out. If you had previously claimed 2 exemptions, claiming 4 will give you a take home pay raise.

The real key here is not to spend the extra money.  Take the extra funds going to your checking account and have them automatically re-routed to a savings or money market account. If you don't see the extra money, you won't spend it. At the end of the year all the extra will be in your bank account. If you need it during the year it's available to you. You won't have to wait to file your tax return to get  your money.

One caution here: this is a good strategy if nothing has changed for tax purposes between last year and this year. If there was a different tax event, then you need to run the numbers.

Remember, it's your money. Take care of it.