Are you relaxed now that you have filed for your taxes? But don’t get too relaxed. Before you take that tax refund and go shopping for that new 60″ plasma or those pair of high heels you’ve wanted, here are some steps you can take to stay ahead of the curve for next tax season.
Your withholding is the money that comes out of your paycheck every two weeks or so to cover your taxes. The government takes this money little by little to make your tax bill a bit more easier to pay. But the amount the government takes from your paycheck is just an estimate.
Did you get a refund larger than 1000 bucks? Think you’ve made it?
This just means that your withholding was too high. For example, if you got a refund of $3000, it basically means that you payed IRS $3000 too much in an interest free loan. You basically loaned them $3000 for no interest. You could of taken that money and spent it on things during the year.
Did you Owe Taxes?
This means your withholding was too low and you got an unpleasant surprise. Pay up!
Need to Change your Withholding?
- Contact your HR to update your W-4.
- Know who your dependents are.
- Learn what are tax deductions and thats write-offs
- Buy a House
- Get Married
source : (Daily Finance)