The primary method of settling tax payments is through payroll withholding in the US.
In this process, the government deducts a percentage of your money from your paycheck, and the Internal Revenue Service uses it as a credit towards your tax bill.
Because this is an automated process, you need to ensure that you accomplished your initial paperwork correctly when you were hired for your job so that you do not overpay the IRS.
You do definitely must adjust your withholding allowance right.
However, there's a gap as to exactly what is right and what's erroneous when it comes to this topic.
Going about things in a noticeably spurious way may cause severe IRS problems down the line.
If your paycheck isn't deducted sufficiently, you'll end up owing the IRS a substantial amount of money come April.
This is not a circumstance that you have to be in.
You are literally paying the government too much money if you have too much withheld.
The government has been using your money for a whole year, even when you receive a refund when you file taxes.
That is time that you could've been earning interest on that money, or spent that money for other causes.
What's worse is that you basically offered the government an interest-free loan.
Basically lots of people are giving the government interest-free loans by overpaying their taxes.
As the best choice, your tax withholding must be adjusted so that you only pay sufficient for your tax liability.
This is essentially a zero sum amount so that you will not owe the IRS money, and they won't owe you money, as well.
It is a surprisingly simple process, and all you have to do is file a new W-4 form with your current employer.
Making changes on this form and filing it will adjust the amount of money being taken out of each paycheck.
It is recommended to undergo this process when a major alteration in your life happens such as marriage, birth of a child, or purchasing a home.
To make the alterations simpler, the IRS has an interactive calculator that lets you calculate your withholding amount, as well as several worksheets attached to the W-4.
A slight decrease in bring home pay will be felt by people who normally pay the IRS a large amount each year.
On the opposite end, you will get a slight increase in your tax home pay if you normally receive large refunds from the IRS.
You'll no longer be loaning the IRS your money interest-free.
Now you can be the person who earns money off of your own hard-earned money, and you can stop lending it out for free to the government.