| Many people are excited to file their taxes because | | | | year to year, depending on tax-rate changes, your |
| they receive a refund. Realize that a refund certainly | | | | eligible deductions, whether you lose or change jobs or |
| feels better than owing money, however it also means | | | | life events like a divorce or childbirth. If you routinely |
| you over paid. If your refund is several hundred dollars | | | | use your refund for something specific - like paying a |
| you may want to consider changing your income tax | | | | tuition or insurance bill - this can be a risky practice. |
| withholding. You can do this with the W4 form | | | | You really can not know for sure until you do your |
| available in your H.R. department. When you use zero | | | | taxes and determine the amount of your refund, or if |
| (0) on your W4 the maximum is withheld. The higher | | | | you will even get one. Monitor your withholding each |
| the number, the lower the withholding from your pay | | | | month and adjust the W4 if your situation changes. |
| check. | | | | 3. You are not at risk for refund delays. Although it is |
| 1. You will keep more money from your paycheck | | | | somewhat unusual, several States that have been hit |
| each month. If you are like the average taxpayer, your | | | | hard by the recession are temporarily freezing tax |
| refund this year is about $3,036, according to IRS | | | | refund payouts in 2010(especially those with income |
| statistics. That's a $253-a-month, interest-free loan you | | | | taxes, which may be down due to job losses). Don't |
| gave Uncle Sam last year. Instead, use that money all | | | | be one of the folks whose money is tied up by state |
| year long to make extra principle payments towards | | | | cash-flow problems. You are not required to give this |
| your debts. Once you are debt free, invest the extra | | | | interest free loan to the State! |
| money in ways that will further reduce your tax liability | | | | By understanding your current financial situation and |
| or improve your ability to earn more money; invest for | | | | making financial changes you will be in a strong position |
| college, boost your retirement savings, or make home | | | | to improve your financial situation. Imagine a day in the |
| improvements. | | | | future, when you look back at reading this article as |
| 2. Your goals should not hinge on the amount of your | | | | the beginning of your financial independence. |
| refund. Your tax refund can change significantly from | | | | |