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mkcarman · Apr 12, 2009, 06:00 PM

On my April 1st check, less federal taxes were taken out giving me about 19.00 a paycheck more. Someone has told me that allowing this reduced withholding will cost me when I file my 2009 tax returns. That instead of getting say a $500.00 refund, I'll get a lower refund to compensate for the extra money I am receiving in my checks now. Is this true? If so, I don't think I want the extra money now.

Fr_Chuck · Apr 12, 2009, 07:02 PM

No, or yes, if you normally got back everything you paid in, and you pay in less, then you will get less back,

But if you have the proper amount held out, the change is merely a change in the tax rates to off set any stimulas check.

My son for example, maks very little, so he gets back all he pays in fairly well, so if he pays in less, there is less to get out.

So what you do, take that 19 dollars put it in a savings account each week, and at the end of the year, you already have the money you would have gotten back in the bank.

mkcarman · Apr 12, 2009, 07:15 PM

Thanks for the quick response. I do have the correct amount taken from my check. No, I don't get everything back that I put in. So, if I understand you right... if I take the reduction in payroll deduction (the $19.00 a check), and file in 2010 as usual, I should get approximately the same refund as I do every year?

ebaines · Apr 13, 2009, 12:32 PM

Actually the lower withholding rates that recently went into effect are essentially a "pre-rebate" for your 2009 taxes. This is part of the recent stimulus bill. If you remember back in 2008 when many people got "rebates" on their 2007 taxes as part of that year's stimulus - well this is basically the same thing, but rather that waiting for you to file your 2009 taxes they are giving the rebate through lower withholding now. The intent is for the lower withholding to act as a stimulus now. For most people this means that the amount of refund they may get next April should not be affected. However, depending on your circumstance it's possible that the lower withholding may not be exactly the right amount to exactly equal the amount of your rebate.