Well, here it is. A few days before the drop dead date to file your taxes. I’m betting that most people that haven’t filed already probably owe the government money. For everyone that is sitting on their refund check laughing about how smart they are, you might want to stop and think.
If you received a large refund from the IRS this year, you may think it’s a great thing! â€œAll right, the government owes ME money!!â€. Well, it really isn’t such a good thing. It’s not that the government owes you money, it’s just that they are giving you YOUR money back without having paid you any interest. People that are not getting any money back, or are having to pay taxes, actually faired better than you did because they kept their money all year long instead of having the government hold it for them interest free.
In theory, we should have all kept our money all year and earned interest on it. Yeah, I know, many folks didn’t save any of that money and now are having to dig up or borrow someone else’s money to pay their tax bill, but if they had been a little bit more â€œmoney smartâ€ they wouldn’t be in that situation.
I found a withholding calculator on the IRS website that helps you figure out how much you should withhold all year in order to break even at tax time. You can find it here:
When I run the numbers, it tells me that I should claim 7. I can’t bring myself to claim all 7 but I have raised up the number by a few. This way, my take home pay is higher on every paycheck and I’ll get a smaller return next year. Items that can affect how many you should claim are: interest you paid on your home, how many children you have, and other anticipated deductions. (not an all inclusive list)
So, if you want to try and break even on your taxes next year, go check out the calculator. Start receiving all the money you deserve every payday instead of waiting all year for it.