Do not expect your tax refund, increase your Take-Home Pay Today

Let's face it, we can all use more in our weekly or bi-weekly / checks semi-monthly pay. Yes, it would be difficult to walk into the boss's office "today and merits your wisely argued for a revival of the economy in turmoil as it is. There are, however, a way you can increase your net income today (or just when your human resources department can handle the change).

You know that little piece of paper that you completed when you began your work? The worksheet that you probably had no idea what to do with but I knew it was completed? It's called a W-4 and its purpose is to tell the employer's HR department know how much federal withholding, they should be taken from your gross pay each pay period. Most people choose 0 chosen so that they can receive a refund heavy when they file their annual income tax in 1040, which is a huge mistake. Some see it as "forced savings", which to a degree is understandable, except for one small fact: there is no interest earned on these "savings". It may be nice to see a significant direct deposit into your bank account after filing your 1040 to reimburse holiday expenses, or fund your IRA, or even finance your summer holiday, but with more people struggling to live with current treatments, why you want to lose the ability to have that money in a savings account high yield (currently paying between 2. 75% APY-4. 00% APY by Bankrate. com from 5 November, 2008) or use it to pay for daily expenses?

Another often overlooked method of reducing tax deductions your employer is Sec-125 Cafeteria plan flexible spending account (FSA). This vehicle is a way to pay for general health and childcare expenses such as daycare, medical insurance premiums and most out-of-pocket medical expenses. Under such a plan, contributions are exempt from the State, Social Security, Medicare and taxes (essentially excluded from earnings in calculating the tax). This way, you always pay the same amount of money for medical expenses and children, but the gains are not taxed, leaving more money in your net pay for each period. Not all employers have established plans, so you'll probably need to ask your HR department about this, or ask that the matter be investigated.

Taking advantage of these not-so-secret methods to reduce your withholding tax, you effectively increase your net pay, and you give a little extra income to be used responsibly, hopefully —

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