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How Do I Adjust My Tax Withholding

Posted on March 2, 2011 by Leasa Magnuson in Individual Tax

This time of year when I meet with clients I hear the same request over and over again, “Please get me a large refund”. I find it amusing that the same people who dislike paying taxes are willing to let the government have an interest free loan throughout the year in order for a large refund in April. I would think it was preferable to have a little extra in your pocket every month and either have a small refund or owe the IRS a little.

If you are having too much withheld and receiving a large refund at year end there is an easy fix. Your employer asks every year for you to fill out a W4 this is the document that helps the payroll department determine how much to withhold out of your paycheck. If too much is being withheld you need to do one of two things. Either reduce the amount of additional tax you are voluntarily asking to be withheld or increase the number of allowances you are claiming. Don’t go hog wild and claim 10 allowances so that no money is withheld from your paycheck because 2 things will happen. One you will owe a large chunk of money at year end and two the IRS will send you a “lock in letter” which will basically assign you the number of allowances you are allowed. The letter will go to you and your employer so be reasonable when you fill the W4 out. If the form causes you to have a panic attack ask your friendly accountant to help you fill it out. If reading and filling out forms is your thing the IRS has a publication to help you fill out the W4 form, just go the irs.gov website and search for Publication 919.

Wage Withholding

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Testimonials

Leasa Magnuson was there when we needed her.

An unexpected audit on our returns was triggered by an unfortunate investment loss. All of the horror stories we had heard about came to the top of our minds and the adrenaline started pumping. We had never been through an IRS audit and didn’t know what to expect. We gathered all of the information requested. Leasa reviewed what we had, suggested a few more items and then we dropped off the requested supporting documents to the IRS several days prior to the audit. Promptly at 9:00 a.m. on audit day Leasa was there to support me and answer the grueling questions I was sure would come from the investigator.

Before we had a chance to take the hot seats in the investigator’s office, we were told that they had reviewed our documentation and we were given a "no change" verdict – which means everything checked out. We were free to leave.

I am confident Leasa’s council, review, and organization of our documentation and giving the IRS advanced time to review the information led to the positive outcome.

We are very lucky to have her on our team and will continue to use Leasa in the future.

Anita & Mike Kelly

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4025 Automation Way #D1 (Map), Fort Collins, CO 80525 - Phone: 970-226-4686