Your Tax Refund – It’s Not Free Money!

Your tax refund is the result of your employer withholding too much money from your paycheck. According to the statistics, the average Mississippi tax refund is close to $3000. This equals an extra $250 that could be added to your paycheck every month. Instead you gave the government an interest free loan of your money for a year.

Now is the time to review your W – 4. This is the form you filled out for your employer when you started work. The number of allowances you marked back then may not be appropriate for your situation today.

If you take zero or one allowance, your employer withholds the maximum amount of taxes. The more allowances you take, the less tax your employer withholds. In the alternative, you can specify a specific dollar amount to be withheld on line 6 of the W – 4.

There are many reasons Mississippi taxpayers need to adjust their withholding and most involve life changes such as marriage, divorce, birth of a child, purchase of a home, additional income or retirement.

Your tax preparer can help you determine the correct amount of withholding and the IRS offers a withholding calculator at its website, irs.gov. To use it you will need your most recent pay stub and your 2010 income tax return.

Disclaimer: This blog is intended as general information purposes only, and is not a substitute for legal advice. Anyone with a legal problem should consult a lawyer immediately.

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