Tax Refunds (Part 2)

Big tax refunds are considered normal. Truth be told, they are a refund of what you overpaid on your tax bill for the year.

Do you overpay your electric or gas bill? How about your phone bill? Well, you shouldn't overpay your tax bill either.

Do you feel this is the only way you can save money? Will you spend it if it is in your normal paycheck?

If so, here are a couple of ideas that you can set up for yourself to "withhold" the money to you instead of Uncle Sam.

1. If your employer allows you to direct deposit your paycheck into more than one account, set up an account to have an equal amount deposited each pay into this separate account.

2. Set up a second account with your bank and have an equal amount automatically transferred to the second account each payday.

Either way, you won't see the money in your normal account. Ignore the fact you have a separate account set up. Instead of loaning the government money interest free, you will be putting it into your account to use later. You won't have to wait for a refund each March. It will already be there waiting for you to use anytime you want.

To calculate how much you should have withheld for yourself, have your tax preparer estimate your taxes for the upcoming year and change your w-4 with your employer. Take the extra amount that resulted from your w-4 change and put it in your second account. You are still having the money withheld, but this time it is to yourself.