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Tuesday, October 18, 2016

How to Calculate Your Tax Withholdings

Did you know the IRS has a withholding calculator? Well, they do! If you are an employee, get your recent pay stubs and income tax return and you can estimate the taxes that your employer will withhold.

These and other online tools are really helpful to understand what you will owe and to budget accordingly. If you owe taxes versus getting a refund, as a general rule, it's always helpful to get this amount as early as possible so you can save enough to pay your taxes in time. It also helps for your overall budgeting as it gives a clear picture of what your net salary will be. You can then plan how much to budget for groceries, bills, rent or mortgage, etc.

Speaking with your accountant or certified financial planner can ensure you calculate this correctly as well as create a budget that fits your needs and lifestyle.

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