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Understanding Your Tax Withholding

Charles Schwab2024-02-06
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The video discusses the importance of adjusting tax withholding to avoid overpaying or owing penalties. It recommends periodic paycheck checkups to ensure withholding aligns with changes in income or family status. The focus should be on covering tax bills rather than receiving a large refund. Regularly checking withholding using IRS tools or consulting a tax professional is advised to stay on track.

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Importance of Withholding in Tax Refunds and Payments
00:22
The IRS suggests regular paycheck checkups to adjust withholding based on changes in employment, income, or family situation.
Over-withholding results in interest-free loans to the government, while under-withholding can lead to penalties.
It is recommended to aim for withholding just enough to cover tax bills or owe a small amount during tax season.
Focus should be on total taxes due rather than the refund amount, and regularly checking withholding using IRS tools or consulting with a tax professional is advised.