Get a Jump on Next Year's Taxes

If you got a big refund this year, maybe you weren't having enough withheld. And from an economic perspective, you don't want to give Uncle Sam your money.

Granted, from a psychological perspective, many folks think of their refund as a forced savings account. But if that's the case, then consider having an equivalent amount put into your own savings account each pay period.

Because remember, you're better off having a balance due or breaking even than getting a refund.

So you may need to adjust your wage withholdings for the rest of 2007. You'll need to pull out your W-4 -- Employee's Withholding Allowance Certificate. You remember that form, don't you? You filled it out when you first started your job. You had to add up a bunch of "1s" and somehow your HR department then knew how much money to withhold from your paycheck for taxes.

Well, the form is pretty confusing, so be sure to read Publication 919 -- How Do I Adjust My Tax Withholding? But know this: If you got a big refund, then you want to increase your allowances (or "1s") so less tax will then be taken out of your paycheck. If you owe big, then you'll need to decrease your allowances so that more tax is taken out.

Most people think their allowances are equal to the number of people in their family. But that's not necessarily true. You can take an allowance for anticipated itemized deductions and upcoming losses, too.