TAX TWEAK: We survived again – tax filing deadline for most of
us was yesterday.

If you’re one of the citizens who expects a refund for your 2005
taxes, that may seem like a good thing. However, what you’ve
essentially done is allowed the federal government to use your
money, interest free, for the entire year.

If you have an instinctual dislike for that sort of thing, you
might want to adjust the amount of taxes your employer withholds
from your payment.

That’s the word from the Pennsylvania Institute of Certified
Public Accountants. They suggest that you adjust your withholding
by filing a new Form W-4, Employee’s Withholding Allowance
Certificate, with your employer. The earlier in the year you do
this, the easier it will be to have the appropriate tax withheld
for 2006.

Your employer uses the information you supply on a Form W-4 to
determine the appropriate withholding amount. There are two key
pieces of information you need to provide.

The first is whether you choose to have taxes withheld at the
married or single rate.

Only taxpayers who are married and file a joint return should
choose the married status, which calls for a lower withholding
rate. Others are best off having taxes withheld at the higher,
single rate.

The second is the number of withholding allowances you claim.
You can claim any number of allowances – up to the maximum number
to which you’re entitled. The more allowances you claim, the fewer
taxes withheld.

As we all know, however, nothing is simple when it comes to the
IRS. And the W-4 includes several worksheets: a personal allowance
worksheet, a deductions and adjustments worksheet, and the two
earner/two-job worksheet. To determine the appropriate number of
allowances, the IRS suggests that you complete each of the
worksheets that apply to your circumstances.

If you prefer, the IRS Web site offers an online W-4 calculator
that estimates your tax bill and recommends the number of
allowances you should claim.

Once your withholding’s corrected to avoid overpayment, you’ll
find more money in each paycheck. Deposit the extra cash in a
savings or money market account, add it to your retirement savings,
or invest it. You may be able to arrange to have an amount deducted
from your paycheck each month and automatically credited to a
savings or investment account.