• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar

Money Plan SOS Personal Finance

Helping you Pay Attention, Not Interest

SUBSCRIBE FOR FREE

  • Apple Podcasts
  • Google Podcasts
  • Spotify
  • Pandora
  • Stitcher
  • Podcast RSS
  • TuneIn
  • iHeartRadio
  • Overcast
  • Pocket Casts
  • Castbox
  • RadioPublic
  • Subscribe by Email
  • Podchaser
  • RADIO.com
  • Player FM
  • breaker
  • Home
  • Podcast EpisodesA downloadable internet radio show to help everyday Americans pay attention, not interest. No high-brow financial discussions here, this is everyday stuff we should have learned in school or financial topics we need to know about.
    • Dave Ramsey’s Baby Steps Series
  • Blog
  • About Steve and MoneyPlan SOS
    • My story of debt freedom
  • Contact
    • Guest Posting
You are here: Home / Podcast Episodes / Less Tax, More Money In Your Paycheck – MPSOS195

Less Tax, More Money In Your Paycheck – MPSOS195

By Steve Stewart on August 6, 2015

Less Tax, More Money In Your Paycheck – MPSOS195
Listen to the Episode Below (00:34:00)
0.75x
1x
1.25x
1.5x
2x
0:00
00:34:00
  • Less Tax, More Money In Your Paycheck – MPSOS195
Apple Podcasts/iTunesGoogle PodcastsSpotifyStitcheriHeart RadioTuneIn RadioDownloadShare
Leave a ReviewListen in a New WindowSoundCloudSubscribe on AndroidSubscribe via RSSSpotifyPlayer Embed
Powered by the Simple Podcast Press Player

Podcast: Play in new window | Download

Do you know why stories of people with $.32 refund checks are in the news?

Because they are so rare!

Most people want to get a big tax refund. However…

Big tax refunds aren’t always a good idea

Begin playback at [01:35]

Getting a huge refund is an extremely inefficient use of money – both for you and for the government.

I recommend adjusting your withholding so you can bring more money home and put it towards your goals:

  • Pay off high-interest rate debt
  • Building up reserves
  • Saving or investing

How? By adjusting your tax withholding.

Did you know you could change withholding mid-year? All you need is to complete Federal Form W-4 and submit it to your employer (Benefits department or HR manager, etc).

What do I change it to?

To find the answer you need to run a mid-year income tax assessment.

Run a mid-year income tax assessment

Making course corrections in August helps steer your tax withholdings closer to the target – which is to owe nothing or get a small refund.

It’s almost impossible to be exact, there are too many moving parts, but you can bring your tax-boat closer to the dock in the last few months of the year.

Gather together the following items:

  • Last year’s tax return
  • Last year’s Schedule A (if you itemized deductions)
  • Your last two pay stubs (include your spouse’s as well)

Note: If you have a small business or are an entrepreneur then you will need to run a Schedule-C calculation to estimate self-employment income. You may also want to see a tax professional.

Also, you will want to estimate any:

  • Child/Dependent Care expenses
  • Expected bonuses
  • Expected interest, dividends, etc

I use tax preparation software to run my calculation but you could follow the prompts at the IRS website to complete a mid-year tax assessment:

http://apps.irs.gov/app/withholdingcalculator/

Federal forms and resources mentioned in this episode:

Federal tax withholding calculator: http://apps.irs.gov/app/withholdingcalculator

Federal form W-4 (change withholding): http://www.irs.gov/pub/irs-pdf/fw4.pdf

Federal form Schedule-A (Itemized Deductions) http://www.irs.gov/pub/irs-pdf/f1040sa.pdf

Federal form Schedule- C (Profit and Loss from Business) http://www.irs.gov/pub/irs-pdf/f1040sc.pdf

*Disclaimer: I am not a tax preparer or tax advisor. This is a service I normally provide my U.S. clients as part of their coaching process. It is intended to provide valuable information only that you can use to improve your financial situation.


Ponda from the Honda

Begin playback at [15:07]

5-5 payments left-

Only 5 1/2 more house payments to go!


How $5 a week turns into $228,000

Begin playback at [27:07]

$5 a week for 45 years at 10% growth is $228,000.

Yes, really.

Easily open an IRA account or education fund for your kids with Betterment*

Below is a screenshot of my “$100 a month” experiment. I started the account in 2013 and it’s not doing too bad.

Steve's return on investment with Betterment. Your results will vary

* Note: Your results will vary. Past results are not indicative of future returns

Open a betterment account and get 30 days free (no fees)

Reader Interactions

Comments

  1. HowardH says

    September 28, 2015 at 12:04 am

    I just heard your Ponda from the Honda – We killed our mortgage 6/2014 – the feeling is so great!!! Now I get the credit card companies pay US for using the their cards!

  2. Steve Stewart says

    September 28, 2015 at 11:24 am

    Awesome Howard! We are back on track to paying our mortgage off by Christmas 2015 (pulling a little emergency fund savings out since we won’t need such a large emergency fund).

    Would you like to know when my new show is coming out? Subscribe to the Attention To Money Guide and I’ll update you via email http://SteveStewart.me/updates

Primary Sidebar

Copyright © 2021