In Episode 97 of Credit 101, one of the methods discussed to get some of your income tax refund early is to change your withholding at work. Here’s an overview of this strategy:

1. Understanding Tax Withholding:
   • Tax withholding is the amount of money your employer deducts from your paycheck to cover your federal and state income taxes, as well as other taxes like Social Security and Medicare.
   • The amount of tax withheld from your paycheck is based on information provided on your Form W-4, including your filing status, number of allowances, and any additional withholding requested.
2. Adjusting Your Withholding:
   • By adjusting your withholding at work, you can increase or decrease the amount of tax withheld from each paycheck.
   • If you consistently receive a large tax refund each year, you may choose to decrease your withholding to have more money in your paycheck throughout the year instead of waiting for a refund.
   • Conversely, if you owe taxes or prefer to receive a larger refund at tax time, you can increase your withholding to have more taxes taken out of each paycheck.
3. Benefits of Changing Your Withholding:
   • Changing your withholding can provide more immediate access to funds throughout the year, rather than waiting for a lump sum refund after filing your tax return.
   • Having extra money in each paycheck can help cover expenses, build savings, or pay down debt without relying on early tax refunds or loans.
   • Adjusting your withholding allows you to customize your tax withholding to better align with your financial goals and cash flow needs.
4. Consultation with Tax Professionals:
   • Before making changes to your withholding, it’s advisable to consult with a tax professional or financial advisor to assess the potential impact on your tax liability and overall financial situation.
   • Tax professionals can help you determine the appropriate withholding allowances or adjustments based on factors such as changes in income, deductions, credits, and financial goals.

By changing your withholding at work, you can potentially access a portion of your income tax refund early by adjusting the amount of tax withheld from each paycheck. However, it’s essential to carefully consider the implications of changing your withholding and seek guidance from tax professionals to ensure it aligns with your financial objectives and tax planning strategy.