Whether you're paying in or receiving a refund, it's difficult not to think about how hard you worked for your money, and how much goes out not only to the IRS, but to pay down credit cards, pay monthly utility bills, etc. By overpaying your taxes, you're giving the government an interest-free loan. Lower your W-4 withholding and you'll receive more money from each paycheck. Instead of giving this money to the government each month, you can invest the extra dollars in your company retirement plan, an IRA or a mutual fund. To quit overpaying your taxes and lower your withholdings, ask the accounting or human resources department at your employer for a new W-4 form.
Timing is everything.
By law, employers are required to distribute W-2 forms by Jan. 31. If you're expecting a refund, be sure to file early. The sooner you file, the sooner you'll receive your refund, which you can use to pay down debt or invest. In addition, filing electronically allows you to deduct your tax preparation fees from your refund and receive proof from the IRS that they've received your return. Explore IRA options.