This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article discussing the types of situations in which taxpayers should consider adjusting their withholding:
The IRS issued about 95 million federal income tax refunds by May 12, 2023 (for tax year 2022), averaging $2,812.1 You might consider this type of windfall a stroke of good fortune, but is it really? You probably wouldn’t pay someone $234 each month to receive $2,812 back at the end of a year…
…But that’s essentially what a tax refund is — the repayment of your interest-free loan to the government.
If you received a large refund on your 2022 return, consider reducing your federal income tax withholding, which would leave you with a bigger paycheck. Taking home more of your pay may let you put that money to better use.
For example, you may be able to pay off credit-card debt sooner, build up your emergency savings, or contribute more to a retirement account. If your tax bill was higher than you expected and you had to scramble for the money to pay it, bumping up your withholding might…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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