Multiple Jobs

[ILLMAS]

A couple of my clients that had multiple jobs during 2008 are seeing a lower refund this, how can their employer correct the withholdings?

[kcjenkins]

They need to file new W-4s that have a bit extra held out, if they want a larger refund. Although as long as they have some refund, they are actually OK.

[michaelmars]

WHY would you have a client increase their withholding only to get a refund. why should the gov't earn the interest and have the use of the money.

when a client tells me they like big refund checks i have them onpen a savings account and transfer to it every paycheck.

[kcjenkins]

Well, some clients just find that the only way they can force themselves to save is by using the over-withholding of taxes to get a large refund. I agree totally that it is not a smart way to save, but OTOH, it is the client's right to make that choice. If that is the way they want to do it, I see it as my job to tell them the correct way to do it. If the company they work for has a savings plan deduction option, I will recommend that. But if they want a large refund, that's their call, not mine.

[michaelmars]

most payroll companies allow up to 8 different accounts for direct deposit-thats another way to get the money into savings.

[JohnH]

I do think it's important to put things in perspective. While I agree philosphically that it isn't a good idea to let the government hold one's money, it's a pretty good alternative for someone who doesn't have the discipline to save. The forced savings represented by the tax refund at least gives them a chance to accumulate a few dollars, even if they blow it at year end.

Assuming a $5,000 refund, and acknowledging that a money market account currently pays about 3/4 of 1%, that means that a $5,000 tax refund costs the individual $18.75 in foregone interest. (I assumed that the $5,000 went into the account in equal installments throughout the year. Paying $18.75 to put that $5,000 aside is virtually irrelevant, especially since they sometimes pay $180 or so to get their hand on the money via a RAL).

[michaelmars]

factor in their credit card interest charges that could be minimized too!

[mcb39]

On another note, I am finding that several clients with multiple jobs and in view of the new withholding tables; are having little or nothing withheld. This is particularly true in the case of students who are someone elses dependent and therefore do not qualify for the making works pay credit. It is a totally mixed bag this year.

[JohnH]

factor in their credit card interest charges that could be minimized too!

Yes, that would be the other side of the coin, woulnd't it?

[Jack from Ohio]

Currently the IRS is paying 4% on monies not paid out. If that same $5,000 refund were left at the IRS (not file for a whole year) there would be an additional $200. When the best 1 year CD rate is currently 1.75% it would mean the taxpayer would gain $112.50 by allowing the IRS to hold their money.

Been a while since 1 year 4% money was available.

I let the client decide.