It’s Your Money: Why Not Get Your Tax Withholding Right?

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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