How To Get An Instant Pay Raise

As a gentleman was leaving my class recently, he wanted me to clarify something I had said. He was making sure that he should take his four or five thousand dollar tax refund and pay off debt.

I was stunned. This money represented $400-$500 that could have been in his pocket every month. A survey of my friends this week revealed one who was getting back $2800 and one getting $3300 back this year.

Getting a large tax refund (over $500) means you are having too much money withheld from your check every pay period.

Many people use this as a forced saving plan and it does not make any sense. You are loaning the government YOUR money, interest free. Every $1200 in refund is an extra $100 per month you could have used to eliminate debt or invest for your future.

I 'd venture to say that most people who do get large refunds could use this money every month to ease their debt burden. This burden frequently leads to late charges and higher interest rates. Instead, they like the feeling of getting that big check in the mail and figuring out how to spend that chunk of money.

The ideal situation is to either owe or get back $100.

If you get a big tax refund then you should adjust your allowances. The more allowances you claim, the less money is withheld from your check for taxes. It generally does not matter how many allowances you claim. If the government gets it's money they really don't care how many allowances you claim.

Here is how to get it right. Take the time to complete the appropriate worksheets included on Form W-4. The worksheets will help you determine your withholding allowances based on your income, adjustments, deductions, exemptions and tax credits. The worksheets can help you figure the right amount so you don't have too little withheld.

The IRS now has a calculator on their website which you can now access anytime at: http://www.irs.gov/individuals/article/0,,id=96196,00.html

If you need help ask your payroll administrator at work or an accountant.

Keep your money working for YOU!

Leo J. Quinn, Jr. owner of http://www.LeoQuinn.com is a financial educator from the Albany, NY area. For over eight years he has been helping thousands of people get control of their finances and get out of debt in a fraction of the normal time. He has a special offer for readers of this newsletter at http://www.1shoppingcart.com/app/adt rack.asp?AdID=132551

In The News:


Business Tax Loophole: Leasing Assets To Your Corporation

While there are many equally valid reasons to incorporate, saving... Read More

How Likely Are You To Be Audited?

Statistics for IndividualsUnfortunately, the IRS increased its rate of auditing... Read More

Rental Property Tax Deductions

Own residential rental properties? This article discusses how income from... Read More

Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are... Read More

Your IRS Tax Appeal Rights

Are you in the middle of a disagreement with the... Read More

The Seven Deadly Tax Sins: Commonly Missed Deductions

It's that time again, the April 15 tax deadline is... Read More

Fiscal Deity: Tax Consultant

Strategic planning throughout the year results in a minimal tax... Read More

10 Thoughts on Tax Offer in Compromise

Beware of advertisements that claim to settle tax debts for... Read More

Highlights of IRS List of 2005 Tax Scams

Each year, the IRS lists various scams taxpayers get caught... Read More

IRS Lock-In Letters ? What?s An Employer To Do?

Employers often ask employees to designate the amount of tax... Read More

Tax Deductions - Mr. C.P.A. Can I Deduct a Pizza? You Too Can Deduct Your Fun By Using Tax Tips

Recently, I stumbled across a concept that could change your... Read More

Fraudulent Tax Shelters ? KMPG Goes Down Hard

In the largest criminal tax case ever filed, KMPG has... Read More

Electronic Commerce Taxation and Pakistan

Assume a buyer in Pakistan downloads software from the Internet... Read More

The Tax Man Cometh... To Search

You're at your office, or home, and the doorbell rings... Read More

Taxation of Isle of Man Companies from April 2006

At the present time a company incorporated in the Isle... Read More

Tax Trap #4 -- The Quagmire of Depreciation

If you are a Small Business Owner or Self-Employed Person,... Read More

Surprising Truths About Tax Preparers

Choosing the right tax preparer for your business is a... Read More

Tax Jokes and Quotes

Do you realize that some tax forms ask you to... Read More

Tax Trap #1 -- Waiting to Incorporate: What A Difference A Date Can Make

NOTE: This is the first in a series of 5... Read More

To Tax or Not to Tax - This is the Question

To tax or not to tax - this question could... Read More

Anticipating Your IRS Refund Can Cost You Plenty

While accountants are reaching for aspirin, millions of Americans are... Read More

History Of The Federal Income Tax

The powers of Congress, and the limitations set upon those... Read More

A Taxing Investment

April 15 - The most dreaded day of the year... Read More

Section 179 ? Tax Relief From Depreciation Rules

"Depreciation." For business owners, this word is the one most... Read More

Keeping Your Own Money ? NOT Handing It Over To The Taxman

Most people trying to make a crust online (or offline... Read More