With gas prices so high, Greg and I have been evaluating our monthly budget. In a financial planning course I took at BYU, I learned that tax refunds in large chunks are NOT the best solution to utilize or invest your money. I know it is fun to get an extra lump after filing taxes, but essentially we are just giving the government an "interest free" loan. The IRS has a handy dandy "Withholding Calculator" (http://www.irs.gov/individuals/article/0,,id=96196,00.html) that is VERY easy to use. Greg and I discovered that we were paying WAY too much in taxes out of each paycheck and have now adjusted his W-4 so that WE get the money, instead of Uncle Sam. We are getting such a boost to Greg's paychecks, that we will now be able to pay off his 2007 car by the end of the year and eliminate that debt! Sure, we won't get a big lump sum after filing our taxes, but we will get the money dispersed through the year and use it more efficiently.
Just a few tips for those of you that would like to try this out:
- Don't forget to include your tithing as a "charitable contribution" in the deductions.
- You can figure out the taxes and interest on your home (which should also be included in the deductions) by accessing your mortgage information on your bank's website.
- You should reconfigure your withholdings at the beginning of EVERY YEAR.
5 comments:
So funny you mentioned this- we just heard about this a few weeks ago and have recently done the same thing! It is giving us quite a bit more a month! Love it!
Tammy thanks for the info. We have talked about changing our W-4 for a while now but didn't know how to figure out what is best for us. Thanks for the link we will use it for sure.
Great tip. I am so glad that Ryan is in charge of the finances in our family. He has always tried to adjust our taxes to keep as much of our money as possible. I probably would have never thought of it.
That's great info to have. I'll have to file that away for when we're making an income in about a year...ha, ha, ha.:)
Speaking of gas prices on the rise......I spoke to my mom today and it was $4.73 in Ventura, CA!!! It's $3.95 here in McKinney, TX. My dad took the bus to work the other day. A dollar one way. Not bad. What has this world come to? Well, thanks for the tips!
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