This is a rare double post on my site. This will be on both my Tech Blog and my Life Blog, but it is so cool that I have to share.
A few years ago, shortly after I had filed my taxes, I was looking at my paycheck and noticed that well over $100 per pay period was going to Uncle Sam... the downfall? I got all that money back come tax time. I had (have) pretty much a zero dollar tax liability. So I went to our financial person and asked about lowering the amount of federal taxes taken from my check.
I was already claiming myself and my four dependents, but was still paying a ton out when there was no need to. I was told that I can mark myself as 'EXEMPT' and then have a standard amount taken out if I want to.
So I did, I marked myself as exempt and then said to take $20 out per pay period instead of the $120 they were taking, so I gave myself a pretty sizable raise that year. Now over the years as my salary has gone up I have raised that amount to now $40 a pay period, but after just filing my taxes... I got it all back again. Last year I paid about $600 in federal taxes... got a refund coming my way WELL above that amount. Now it is still considerably lower then the $3000 or so we used to get back, but I figured I'd rather keep my money to myself instead of giving Uncle Sam an interest free loan.
So if you're up for giving yourself a raise, talk to your HR department about this. They may give you a little resistance, but if you know you will get it all back... why not get it NOW?
A few words of wisdom:
1. If you rely on the annual tax refund to bail you out of your Christmas spending, realize that this will remove that 'gift'. This is not free money, this is you just getting YOUR money earlier.
2. If you underpay throughout the year, beware... Uncle Sam can fine you! That is why I still pay a nominal amount... just in case.