Kalamazoo and Portage MI Real Estate – When you own a home there are some significant tax savings. A greater Kalamazoo homeowner’s tax saving benefit is usually realized when s/he files his/her federal income tax return after the money. Some people look forward to the refund as a means of forced savings (and if home owners always get that refund and send it all to their lender as a principal only payment, they will be making a significant dent in the amount they owe on their house and will pay off their home earlier and save money on interest) but some people may want to realize the savings during the year.
It is possible to adjust the deductions being withheld from the homeowner’s salary so they realize the benefit of the savings prior to filing their tax returns. This adjustment leads to money in their pay checks. In order to get this set up, the employee would talk to their employers about increasing the deductions that they stated on their W-4 form.
By increasing the exemptions or deductions, less is taken out of the check and the employee will receive more in each pay check. There is a significant caution that should be pointed out here however. If a person over-estimates their exemptions and therefore, underpays their income tax, they might incur interest and would have additional tax to pay when they filed their tax return.
Home owners who are considering this strategy should definitely seek tax advice and discuss it with their human relations department at work. Additional information is available on the Internal Revenue Service website about Completing Form w-4 and Worksheets.