What If?

 

 What if?  Lets say that you make $20 per hour, for a 40 hour work week, that's $800 per week.  You get paid once a week.  You are married with one child.  You live in Minnesota.  You are claiming married with 2 exemptions.  Lets say that you have no pretax exemptions (retirement, health savings, etc.).  On an average paycheck, EVERY WEEK, you pay in $139.20 to the government. ($50 to the IRS, $28 to MN Revenue, $49.60 to Social Security, and $11.60 to Medicare).  What would happen if you had to actually write out a check EVERY WEEK for that $139.20?  Would you be more cognizant of the amount of taxes that you pay if you had to pay it in yourself?  Would everyone else be more conscious of it?
By the way, in this scenerio, your $800 paycheck has now been changed to $660.80 and multiply this by 52 weeks in a year and your $41,600 salary has changed into $34,361.60.
Take your last paycheck and really look at it.  How much are you paying?  I know you don't write out a check each week (unless you are self-employed), but take a couple minutes, on each payday and look at it, REALLY LOOK AT IT!

What is your W-4 saying about you?

How many exemptions are you claiming?
Do you get a large refund at the end of the year?
Do you want the government to use as little of your money as possible?

Many people feel that they would rather be SAFE than sorry and they have large amounts deducted from their earnings and then receive a large refund. These people would rather walk on glass then owe the government any money.

Others feel that they would rather have/use/invest their money all year; they try to MAXIMIZE their exemptions. These people are the risk takers of life, they would rather jump from an airplane then miss out on an opportunity.

You can change your W-4 withholding exemptions at ANY TIME with your human resources department. However, now is the perfect time to contemplate changes. What does your tax refund/debt look like this year? Have you had any major changes: Marriage, Divorce, Births, Adoptions, Children becoming independent, Deceased dependant….? What would you like your tax return’s bottom line to look like next year?