Archive for April, 2015|Monthly archive page

All Else Equal, Tax Season a Good Time to Right-size your W-4 Withholdings

In Economy on April 12, 2015 at 1:39 PM

Here is a macro scenario for households looking to improve their financial positions – an “Operation Twist” on W-4 tax withholdings in order to free up cash for individuals. Imagine you are like the approximately 82 percent of households overpaying your tax withholdings to an April 15th refund of $3,000 yearly. You may believe you had completed your IRS W-4 withholding form correctly upon first glance. However, given this typical scenario, you, like the majority of Americans, have not. According to the back of my napkin, if you take 82 percent of the latest U.S. Census Bureau estimate of 118 million households in the country and multiply by the $3,000 estimated average refund, then the total dollar amount over-withheld from yearly paychecks in the U.S. is $290 billion.
Read the rest of this entry »