| Let's face it, we can all use more in our weekly | | | | spending, or fund your IRA, or even fund your summer |
| bi-weekly/semi-monthly paychecks. Yes, it would be | | | | vacation but with more and more people struggling to |
| difficult to walk into the boss' office today and | | | | live on current salaries, why would you want to forfeit |
| judiciously argue your merits for a raise with the | | | | the ability to have that extra money in a high-yielding |
| economy in turmoil as it is. There is, however, a way | | | | savings account (currently paying anywhere from |
| in which you can increase your net income today (or | | | | 2.75% APY-4.00% APY per as of November 5, 2008) |
| just as soon as your HR Department can process the | | | | or using it to pay for everyday living expenses? |
| changes). | | | | Another often overlooked method of reducing tax |
| You know that little piece of paper that you filled out | | | | withholdings is your employer's Sec-125 Cafeteria Plan |
| when you first started your job? The worksheet that | | | | of Flexible Spending Account (FSA). This vehicle is a |
| you probably had no idea what to do with but knew | | | | way to pay for general health- and child-care |
| that it had to be filled out? It's called a W-4 and its | | | | expenses such as daycare, medical insurance |
| purpose is to tell the employer's HR Department just | | | | premiums, and most out-of-pocket medical |
| how much money in Federal withholding they should | | | | expenses. Under such a plan, contributions are |
| take from your gross salary each payday. Most | | | | exempt from Federal, Social Security, and Medicare |
| people choose 0 withholdings so that they can receive | | | | taxes (essentially excluded from wages in the |
| a hefty refund when they file their annual 1040 | | | | calculation of taxes). This way, you are still paying |
| individual tax return, which is a huge mistake. Some | | | | the same amount of money for medical and child-care |
| see it as "forced savings", which to a degree is | | | | expenses, however the earnings are not being taxed, |
| understandable, except for one small fact: THERE IS | | | | thereby leaving more money in your net pay each |
| NO INTEREST EARNED ON THOSE "SAVINGS". It | | | | period. Not all employers have established plans, so |
| may be nice to see a big direct deposit in your bank | | | | you will probably need to ask your HR Department |
| account after filing your 1040 to pay off holiday | | | | about it or request that the issue be researched. |