Want Your 2011 Tax Refund Early? It’s Easy & Legal!
Receiving a big tax refund check is a wonderful thing! Writing a check to the IRS is never fun. However, believe it or not, you may be better off paying the IRS a small amount on April 15 rather than receiving a receiving a refund check. Why? Because even though you feel like you pay your income taxes when you prepare your tax return, you actually pay incomes taxes all year long! These taxes are paid as your employer withholds taxes from your paycheck and forwards those taxes to the IRS on your behalf. When you file your tax return, you are refunded the difference between the tax you owe and the taxes your employer withheld and already paid for you.
Most tax payers allow their employers to withhold too much income tax each paycheck. As a result income tax refunds averaged over $2,000 in 2008 and is expected to be higher in 2009. As taxpayers we are actually giving the IRS (our government) an interest-free loan. We would be better off saving these withheld taxes and putting them in an interest-bearing bank account and writing a check to the IRS on April 15 when we complete our tax return.
It's not hard to reduce the amount withheld from your paycheck. Just give your employer a revised W-4 form instructing them to withhold less each payday. Your employer’s human resources department should have the form, and it's easy to fill out. If your employer does not have one or won’t give you one, let me know and I will get you one or go to www.IRS.gov and download one.
When changing you W-4, be careful. If you owe too much tax at tax time the IRS may charge you a penalty and interest for the underpayment. It is better to change the W-4 slowly each year until your tax refund is reduced to almost zero but your paycheck increases so you get your money earlier.
Please call me if you want to discuss this further and see how to get more money now than later.
Reg Baker, CPA PFS
Ph: (702) 360-2823
Cell: (702) 283-0784
Email: Reg@regbaker.com
http://www.regbaker.com/
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