It's Time To Think About Your Taxes

Yes, I know that tax time has passed for most of us.

I also know that most of you anxiously await that W2 form each year so that you can take it straight to a tax preparer anticipating a big refund. In many cases this could be costing you a bundle.

Did you know that you can put that tax refund in a savings or other interest bearing account throughout the year?

Why not get that money in your paycheck instead of allowing the government to keep it for a whole year interest free.

Even if most of your refund is a result of the Earned Income Credit you can still receive it in your paycheck.

I just recently completed my Son-in-Laws W4 form (Employee's Withholding Allowance Certificate 2004) for a new job. There are 5 in his family. He was able to claim 11 exemptions, legally. This means that he will have very little Federal Income Tax withheld from his check.

Why would you want to do this and deprive yourself of that Big Tax Refund?

First, you may need to use the money right now to pay down your debt. For some people, this could add $50 to $100 a week to their paycheck.

Second, if you are struggling to make ends me you need the money now.

Third, you could add that much more to your 401k or other retirement account.

If you would like to receive more of your money in your paycheck all you need to do is fill out another W4 and claim as many exemptions as possible. Just ask your employer for another W4 and read it carefully. Make sure you get the 2004 form because the form has changed since 2003.

You can also print your own form and even fill it out on your computer. To do this just go to http://www.irs.gov . Click on "Individual" in the left column. On that page click on "Forms & Publications". Scroll down to "Fill-In Forms". In the forms box find "2004 Form W-4 Employee's Withholding Allowance Certificate". Click on the link that shows up and the form will open and allow you to enter your information.

If you qualify you can do the same thing with your Earned Income Credit. The only difference is that you will need to complete the "Earned Income Credit Advance Payment Certificate" Form W5. Check IRS publication 596 to see if you qualify.

It's your choice. You can choose to give the government a free loan each year or get that money when you most need it, NOW!

Terry Rigg is the author of Living Within Your Means - The Easy Way http://www.homemoneyhelp.com/ebookadpage.html and editor of The FREE Budget Stretcher Newsletter and Budget Stretcher web site http://www.homemoneyhelp.com. He has 25 years of experience counseling individuals and families concerning their personal finances.