GOBankingRates works with many financial advertisers to showcase their products and services to our audiences.
These brands compensate us to advertise their products in ads across our site.
This compensation may impact how and where products appear on this site.
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information.
you’ve got the option to read more about oureditorial guidelinesand our products and servicesreview methodology.
For many, the dream is atax refund a nice little financial cushion that feels like a bonus.
But heres the question:Should adjustments to the W-4 be madeto try and inflate that refund?
Its easy to get caught up in the idea, but dont panic, just organize.
GOBankingRates broke it down and explore the best approach.
Also find out the smartest ways to put your tax refund to good use.
What Is the W-4, Anyway?
If filling out a W-4 feels like just another task thats easy to breeze through, thats completely understandable.
In simple terms, the W-4 tells an employerhow much to withhold from each paycheckfor federal income taxes.
Now, it focuses on personal information such as filing status, dependents and any additional income or deductions.
This helps the IRS determine the right amount to withhold so there are no surprises when tax season arrives.
Why Do People Want Bigger Refunds?
Its easy to see why this might seem like a win.
However, adjusting a W-4 for a larger refundmay only offer a temporary solutionto a bigger financial picture.
But its important to remember that the IRS isnt simply giving away money.
This refund is essentially cash that was already taken from a paycheck throughout the year.
After all, who wouldnt appreciate extra cash from the IRS?
However,its important to understand the trade-offs involved.
Pros:
Cons:
Whats the Alternative?
After all, waiting for a refund is like giving the government an interest-free loan.
The IRS has a Tax Withholding Estimator to help find the right balance.
It helps avoid overpaying, underpaying or any surprises when taxes are due.
So, Should You Adjust Your W-4?
Thechoice really comes down to financial goals.
But its worth considering whether giving up monthly flexibility is worth that year-end check.
Adjusting the W-4 to keep more money in the paycheck throughout the year can give greater control over finances.
The goal is to have just the right amount withheld so taxes arent a surprise whether overpaid or underpaid.
In the end, its about choosing between a small win now or a bigger win later.
Finding the balance that works best for a lifestyle and priorities is key.
More From GOBankingRates
Share This Article:
