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The 2018 tax revision brought many changes to the tax code and, as such, many tax filers entered the 2019 tax season wondering if they would receive refunds or if they were owed money to the IRS. And it's too early to say how taxpayers behaved overall, with the IRS still having countless refunds to process, starting April 5, the average taxpayer who received a refund received a payment of $ 2,833. This figure is certainly in line with the average repayment of previous years, and it is not a small number either.
Filers who end up with a similarly large rebate will no doubt celebrate the fact that they have not only avoided paying taxes on their taxes, but actually have a bargain. At the same time, if you have just received a large amount of money from the IRS, it is helpful to take steps to get more money throughout the year rather than waiting for the tax season for to receive the money that is rightfully yours.
SOURCE OF IMAGE: GETTY IMAGES.
A larger refund is not really a good thing
If you did not expect a tax refund this year, then a payment of $ 2,833, or anything in the vicinity, might seem like a fortuitous turn of events. But in reality, getting so much money in one piece is not ideal, especially because you get it well after winning it.
Many tax filers consider the refunds as free money, but in reality it is your the money for which you worked, but that you have allowed the IRS to hang around during the year If you are in a good place to save money, giving up immediate access to this money is not the worst mistake to make. But if you do not have a lot of savings, which is the case for most Americans, giving up that money in your paycheck could damage your finances more than you thought.
In fact, think of the debt you have accumulated over the past year. Would $ 236 more a month keep you from accumulating so much? If the answer is "yes" then you will need to make sure that you will earn more money in your paychecks from now on, and you can do this by adjusting your W-4 deduction to claim additional benefits. The more you claim, the less your employer will withhold tax on your earnings month after month.
If you are concerned that adjusting your withholding results in a situation of underpayment of your taxes and duty to IRS next year, a good solution is to use the extra money you receive. in your paycheck and place it in a dedicated savings account reserved for emergencies only. If you come at this time next year, you owe a little money to the IRS, you can tap into that account to pay your tax bill. Otherwise, you can keep this money for unforeseen expenses and avoid new debts.
Another thing you can do to avoid having to owe money to the IRS next year after adjusting your withholding tax. Pay estimated quarterly taxes on any income you earn outside of your usual job, that it is a money gain from your self-employment or from a business. dividend or investment income that you receive. This will increase your chances of reaching the breakeven point during the tax season and ideally this is what you should be aiming for.
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