HOW TO PUT MORE
MONEY IN YOUR POCKET
According to the 2003 American Payroll Association (APA) national
online survey, “GETTING PAID IN AMERICA,” nearly two-thirds, or
65%, of America’s workers would experience financial difficulties
if their paychecks were delayed for just a week—indicating that
workers are living from paycheck to paycheck.
Time+Plus Payroll Services,
America’s leading developer of payroll, payroll tax, electronic
timekeeping and human resources solutions and services, suggests
several tactics you might want to consider to boost the power of
your paycheck. Tactics include adjusting your withholding tax,
participating in voluntary savings programs and retirement plans,
taking advantage of flexible spending accounts and considering
charitable and other voluntary withholding options.
Pad Your Own Pocket Instead of Uncle Sam’s
You may be
withholding too much tax. It is ideal for you to “break even”
come tax time, and to do this, you must ensure that you figure
your withholding correctly. Why? If you have too little taken
out, you’ll owe money when you file your return - and no one likes
to write out a big check to Uncle Sam. If too much is withheld,
you’ll get a refund. That’s not good either, as you have given
Uncle Sam free use of your money during the year when that money
could be working for you. The point is for you to get the use and
enjoyment of more of your money when you earn it - whether in
increased purchasing power or investments - rather than making an
unintentional, interest-free loan to the government. A change in
marital status or your number of dependents would warrant
adjusting your withholding. Completing a W4 every year would be a
good financial exercise to see how much you should withhold.
Flex Your Money Muscle
Thousands of companies offer employees the opportunity to
participate in a voluntary benefits program known as a “Flexible
Spending Account” (FSA). This account allows employees the option
of using pre-tax payroll deductions for medical, dental, and
child/dependent care expenses. When you participate in an FSA via
payroll withholding, you reduce the amount of wages subject to
Federal income, Social Security, Medicare, State and Local taxes,
thus increasing your take home pay.
Be smart about your 401(k) and/or Simple IRA
Many
workers do not take full advantage of, or effectively manage, the
benefits offered by their employer. For more than 20 years,
Section 401(k) of the Internal Revenue Code has authorized
employers to create tax-deferred savings plans for their employees
to help supplement Social Security. It’s your responsibility to
pay attention to how your contributions are allocated to ensure
your nest egg is appropriately diversified for your stage of
life. Also, find out if your company gives a percentage match to
your 401(k) and/or Simple IRA contributions. If it does, by not
contributing the maximum amount that your employer matches, you
are giving up “free money”.
Your
Paycheck and You
You owe it to
yourself to make the maximum use of your hard earned dollars.
There are many payroll deduction options that can help you plan
your financial future. Time+Plus Payroll Services can answer your
questions and provide solutions regarding your payroll check and
withholding options.
