Form W-4: Withholding, Part 1
The end of the year is coming up and I’m going to see if I’m withholding enough or too much from my paycheck. The IRS puts out a really good publication, Publication 919, that basically goes through the why, when, how’s of adjusting your withholding. Basically you don’t want to withhold too little or you’ll pay fines and penalties, but you don’t want to withhold too much because that money could be saved at a nice 4% savings rate. The publication also has these helpful worksheets that guide you through how to project your 2005 taxable income. Then you figure your tax liability and compare it to how much you will have withheld for the entire year.
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