Time to Adjust Your Withholding? About 67% of taxpayers received a refund in the 2022 tax filing season; the average tax refund was $3,252. Taxpayers essentially loaned the government more than $359 billion without earning any interest in return. It feels good to get a refund, but it might make more sense for some people to increase their take-home pay. The extra money could be used to save more each month for retirement (which in some cases could trigger a larger employer match) or to pay down high-interest debt faster. Many people prefer to withhold more so they will receive a large tax refund, believing they will spend the windfall more wisely than they would with a larger paycheck. Other taxpayers simply fill out their W-4 Forms once and then fail to make adjustments as time passes. You may want to reconsider your withholding decisions if you received a large refund or paid a tax bill last year, or if you’ve recently experienced a major life change such as marriage, divorce, a promotion, retirement, the birth of a child, or are paying for college. The IRS has an online tool to help taxpayers determine their appropriate federal withholding ( irs.gov). You may need to refer to your latest income tax return and pay stubs. Source: Internal Revenue Service, 2022
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