Now is the Ideal time to make changes to tax withholding

Thursday, May 5, 2011

Your W-4 determines how much money your employer withholds from your paycheck to pay taxes based on the number of allowances you claim. Unfortunately, after filling it out once, most people do not give it a second thought.

Consider adjusting your withholding if:
-You paid a large tax bill
-You got a large refund
-You've experienced a big life change, such as marriage, divorce, retirement or birth of a child
-You expect to earn income from a home business that doesn't withhold taxes from your earnings

To increase the amount of taxes withheld from your paycheck, you need to decrease the number of allowances you claim.
OR you can specify a dollar amount. For example, if you want your employer to withhold an additional $100 in taxes from each paycheck, write that number on line 6 of your W-4.

If you choose to be more precise, you can go to the to use the withholding calculator- you will need your most recent pay stub and your 2010 income tax return.

Finally, dont forget the most important step- once you have decided to make a change, see your payroll person and get the W-4 changed!

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