With the
year coming to a close it is time to start reviewing one's finances. Most middle income people will quickly say
"that is something the wealthy people do, it is not for me". Quite the contrary financial planning is
necessary at all levels of income/wealth.
Whether you are looking at it from a wealth preservation point of view
or from a wealth building point of view, planning is a necessity.
If you are
an employee and only have your Form W2 to report at tax time then the review of
your Form W4 on record with your employer is necessary. For those having more than one job it goes without
saying it needs to be an across-the-board review. Form W4 - Employee's Withholding Allowance
Certificate is used to instruct our employers on how to handle our tax
withholding on wages earned.
We all do
not like paying taxes, as they say there is no avoiding death and taxes. Some say "I do not want to pay Uncle Sam until
I really have to", and then proceed to pay as little as possible during the
year. Needless to say most of these
people end up paying interest and penalties for late payment of taxes due. Ensuring how you that use your money
efficiently toward fulfilling your financial goals is of paramount importance. Paying avoidable interest and penalties is
inefficient use of your hard earned money.
Below is a
link to a calculator found Internal Revenue Service (IRS) website. This will help you figure out how many
exemptions you can claim. If you are
single then zero exemptions would be more advisable. Just because the form does not limit your
exemptions it does not mean you should pick as many as possible. Whatever exemptions you select on W4 you need
to remember you will need to match these same exemptions on your Individual
Income Tax return at the time of filing.
Form W4
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