Turning next year’s tax refund into cash in your pocket now

This article organizes the original guidance on turning next year’s tax refund into cash in your pocket now into clear sections for easier reading and reference.

Overview

This opening section presents the main context from the original post.

Each year, millions of taxpayers claim an income tax refund. To be sure, receiving a payment from the IRS for a few thousand dollars can be a pleasant influx of cash. But it means you were essentially giving the government an interest-free loan for close to a year, which is not the best use of your money.

Fortunately, there is a way to begin collecting your 2017 refund now: You can review the amounts you’re having withheld and/or what estimated tax payments you are making, and adjust them to keep more money in your pocket during the year.

Reasons to modify amounts

This section keeps the original guidance focused on reasons to modify amounts.

It is particularly important to check your withholding and/or estimated tax payments if:

• You received an especially large 2016 refund,
• You’ve gotten married or divorced or added a dependent,
• You’ve purchased a home,
• You’ve started or lost a job, or
• Your investment income has changed significantly.

Even if you have not encountered any major life changes during the past year, changes in the tax law may affect withholding levels, making it worthwhile to double-check your withholding or estimated tax payments.

Making a change

This section keeps the original guidance focused on making a change.

You can modify your withholding at any time during the year, or even several times within a year. To do so, you simply submit a new Form W-4 to your employer.

Changes typically will go into effect several weeks after the new Form W-4 is submitted. For estimated tax payments, you can make adjustments each time quarterly payments are due.

While reducing withholdings or estimated tax payments will, indeed, put more money in your pocket now, you also need to be careful that you do not reduce them too much. If you do not pay enough tax during the year, you could end up owing interest and penalties when you file your return, even if you pay your outstanding tax liability by the April 2018 deadline.

If you would like help determining what your withholding or estimated tax payments should be for the rest of the year, please contact us.

Related Resources

These resources connect the article topic with related Bowers service pages and approved professional reading.

• Tax Services
• Governmental
• Bowers Updates
• About Bowers
• Harvard Business Review
• Accounting Today

FAQ

The questions below summarize the main points already covered in the article.

What is the main focus of Turning next year’s tax refund into cash in your pocket now?

The article focuses on turning next year’s tax refund into cash in your pocket now and organizes the original guidance into sections for easier review.

What topics does the article cover first?

The article begins with reasons to modify amounts and then continues through the remaining points in the original post.

Which additional areas are included?

Additional sections include making a change.

Does the post include action items or reminders?

Yes. The original post includes listed items that have been kept in list format for easier scanning.

Was the original post wording changed?

The revision keeps the author wording and updates the structure so the post is easier to read online.