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The Truth About Personal Finance (Collection) by Kay S. Bell, Steve Weisman

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Truth 24. Getting your withholding right

A lot of folks intentionally have too much tax withheld from their paychecks. They consider it an automatic savings account that pays off with a refund when they file their returns.

The Internal Revenue Service likes this process, too, since the agency gets an interest-free loan from these overwithholding advocates.

Withholding is a crucial component of the U.S. tax system, which operates on a pay-as-you-earn arrangement. Essentially, the IRS wants the appropriate amount of taxes on your money as soon as or shortly after you get it.

But overwithholding isn’t the best way to meet your tax obligations. Not only are you giving up use of your hard-earned dollars throughout the year, but you also ...

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