We’ve found an extra $300 a month!

When our daughter was born last year (and I was still organized) I got my husband to fill out a new W-4 to reduce our federal withholding.  He filled out the form and sent it in, so I checked it off my list.  Fast forward to yesterday when the CPA I hired this year sends me the completed tax forms and I see a whopping huge, and I mean HUGE amount of $$ is coming back to us.  How in the world is that possible?  When I logged in and looked at my husband’s last paycheck there was this little bitty # 0 next to the word exemptions.  Explanation: his withholding got raised instead of lowered.  What a mistake for HR to make!  I never even noticed because due to nature of an archeologist’s work his hours and paychecks fluctuate greatly. Needless to say a new W-4 has already been submitted and I will be checking to make sure it’s entered correctly this time.  

If you want to check and see how many exemptions your family should be claiming to be withholding right about what you owe, you can visit this calculator at the IRS page here. 

By changing the W-4 to withhold the correct amount, the savings to us is around $300 a month.  Some of you prefer to get a large refund, while others prefer to pay a little at tax time each year.  Whether we pay extra and get it back or pay just enough, the money is ours either way.  But what if the federal government decides to give out IOUs like California did last year? That would be a very scary thought given the financial year our family has had.  I’d rather have it kept in each paycheck. Having that money month to month means we will actually be able to deposit a little money into savings each month instead of draw from it- even while paying 2 mortgages.  When the house back in AR finally gets rented again we’ll really be putting money back!

The first thing I plan to do when that check comes is to buy a washing machine! Then I’ll be making some double payments on the van loan to knock it out quickly.  Once the house gets rented again I’ll pay off the van completely.  We’ll save around $150 in interest by doing so. What a burden has been lifted from my shoulders from this news. (that making work pay credit helped some too!)

I decided to hire a CPA from back home in AR to process our taxes because of all the financial changes we had last year. (new baby, move, half year resident in AR, me not working, home turned rent house etc.)  I have always used TurboTax to do our taxes, with the exception of one year that I used taxcut.  (I won’t make that mistake again).  Turbo Tax was much easier to use, understand, and follow.  Because we had to pay state income tax in AR, using a program allowed me to only have to enter our info one time.  If you are looking for a program to use to file your taxes I would highly recommend TurboTax.  They even have a free edition that you can use online if you have a simple return.  If you haven’t filed yet, better hurry- you’ve only got about 2 weeks left!