Why hello there. I’m sure this title sounds wild to you but just stay with me! This is really true as long as you play your cards right!! Let’s get right into it.
Taxes. This is something EVERYBODY hates whether you are a low-class laborer, a middle-class politician or a high-class business magnate. They are hated because it means we lose money. We pay money to the government. The government then uses it who knows where and to top it all off…they raise taxes almost every year. So how is that profitable to you and I? I’m glad you asked.
Taxes are the governments way of paying for all their expenses. This is from Mr. President to Congress to our Governor to our House of Representatives. They all must manage the money for a large variety of things. If you need roads done in your state, it requires state money. Perhaps the government must send spies to another country, it requires money. For them to get this money it has comes from all of us. The working class pays a portion of their earnings to the governments and then in turn colleges, schools and roads are all funded. Unfortunately, in today’s day and age most governments are terrible with money and squander it on mere nothings. So, ultimately taxes are a great thing. They are necessary. But the political power, no matter which side or who it is, has not managed our money well in decades.
If you are working a job currently you pay taxes. They are most likely taken out of your check before you even get to see it. It’s auto deducted to pay for your Social Security (which if you are under 40 you likely will never collect), your state tax and generally at least 1 or 2 other things. Now what if I told you that you could reduce these and start earning more of your paycheck?
As unlikely as it sounds you could be stopping yourself from getting the most money out of your paycheck. You see when you fill out a tax form for a job. You must choose if you want to file for exemptions or not. This system works off numbers. This link can provide you with the necessary knowledge to understand how the exemptions work!
https://www.irs.gov/pub/irs-pdf/fw4.pdf
If you decide to claim 0 you are sending the government the most amount of money and guaranteeing that you won’t owe the government at the end of the year. This also means you get a large tax return at the end of the year. A tax return is the government sending all the money that you overpaid back to you. This means you are LOANING your money to the government. And we can all agree they clearly don’t know how to handle it. Therefore, I think it is totally necessary and common sense that you claim a higher exemption. Here’s why.
If you claim the max amount of exemptions, you are at risk of owing taxes at the end of the year BUT……you also keep a much larger portion of your paycheck. Which means you can save it. You have more money to store and spend and invest. So, if you are saving some money throughout the year even if you DO owe taxes at the end you can pay them easily. And you get the peace of mind of having the most amount of control over your money. Rather than lending it to the government. Also, fun fact…that tax return you get every year? If you claim the largest number possible and save some of your paycheck each month after 12 months, it will equal the amount of that tax return. But you are in control of it. Something to think about?
Ultimately you should claim as much as possible, then save and invest your money and live frugally, and you are in control of your money!