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Old 05-26-2006, 09:48 PM
kenny kenny is offline
Ridiculously Active Enthusiast
 
Hybrids: 2006 Honda Civic Hybrid
Posts: 1,107
Default Re: Tax Credit / California?

Keep in mind YOU can control how much is withheld from your paycheck each week.

You can go to your employer and fill out a new W4 form.
On it you write in how many deductions you want to claim.
You have flexibility on this as long as you withhold enough during that year.
It is not illegal to write in any number you want from 0 to 10.
If you write in over 10 you have other considerations you must look into.

The more deductions you claim the less they withhold every week.

Note: How much tax you owe when you do your taxes the following April 15th is separate from how much was withheld.
When you do your taxes if your company withheld too much you get a refund.
If they withheld too little you write a check.

For some reason people LOVE big refunds.
Actuall big refunds are dumb.
You lent all that money but were paid zero interest on the loan you made to Uncle Sam.

What is smarter is to get no refund.
That means you got the use of your own money earlier - each paycheck was a little larger.
What is evern smarter than that is to claim more exemptions on your W4 and end up having to write a small check when you do you taxes - but watch out, if that check is too big you will have to pay a penalty.
So the smartest people carefully calculate how much tax they think they will have to pay when they file the following April 15th and adjust their employer's withholdings accordingly.

Then the geniuses raise their withholdings to the max, 10, for the beginning of the year and change them to zero about March, April, May or June depending on their expected tax obligation.
The reason this is so smart is you get the use of more of your money earlier in the year.
Of course you must plan for the fact that your paychecks will be smaller later in the year.

.

Need fewer troops to support.
Drive a hybrid.
Best tank 71.65 MPG.

Before this car I spent two years learning hypermiling on my 2004 HCH1.

Last edited by kenny : 05-26-2006 at 09:51 PM.
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