Give Yourself A Raise

Withholding from your paycheck is a way to pre-pay your income taxes. Ideally the amount withheld each year would total exactly what you owe in taxes. If the allowances on your W4 were correct, then at the end of the year you wouldn’t owe any additional taxes, and you wouldn’t get a tax refund. It would be a wash.

Contrary to popular opinion, a refund is not a good thing. It simply means you “over withheld” for the previous year and now it’s being returned. It means you gave Uncle Sugar an interest free loan of your money.

If you already have a home-based business that qualifies you for additional deductions, you will be paying fewer taxes in the future. That means your withholding can go down. If you are accustomed to receiving large refunds you also qualify to reduce your withholding. Either way, reducing your withholding increases your take-home pay.

An experienced tax advisor can help project how much your taxes may decrease. Your next step is to fill out a new W-4, claiming the appropriate number of allowances, and submit it to your employer. If you increase your allowances, then your take-home pay will also increase.

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