How to Bring More Money Home During the Year From Your Paycheck

Savvy wage earners may wonder why they should loan money to the government interest-free. You can keep more of the money you earn and still owe nothing at tax time. To increase your take-home pay, you might consider changing your withholding and reducing your health care and retirement plan payroll deductions.

IRS Form W-4

Form W-4 is the Internal Revenue Service document that lets your employer know how much money to withhold from your paycheck for state and federal taxes. You typically fill out this form when you start work with a company. As of 2012, any employee is entitled to claim two allowances. You can change the number of allowances on your W-4 as often as you like.

To make a change, request the form from your human resources department. If you marry and claim your spouse as a dependent, you can claim an additional allowance. You are also entitled to an allowance for each child you support financially. You may be able to claim other family members who live with you as well.

Tax Withholding Calculator

Even if you do not have children, you may be able to increase your withholding amount. The IRS website includes a tax withholding calculator. This allows you to determine whether you need to change your number of withholding allowances and, if so, to what number. It also specifies how much your tax overpayment will be if you do not make adjustments to your Form W-4.

Health Insurance Premiums

Health insurance premiums may also be deducted from your paycheck. To increase your take-home pay, you can make changes to your plan that will lower your premium payments. Carry no more insurance than you and your family need. Re-examine the types of plans available. Health maintenance organizations may cost less than preferred provider organizations.

If you and your family typically take advantage only of preventive care, such as checkups and regular physicals, a lower-cost HMO may be suitable. Even among PPO plans, there may be lower-cost selections available than your current choice. During your company's enrollment period -- often during the fourth quarter of the calendar year -- look into all available options and switch to a cheaper plan if it will suit your health care needs.

HSA or FSA Deduction

A flexible spending account can be convenient. But if you find you struggle to spend all of the money in the account, rather than lose it at the end of the calendar year, you may be able to reduce your FSA paycheck deduction, thereby increasing your take-home pay. Although you do not lose the money you put in a health savings account at the end of the year, if you need more money in your regular paycheck, look toward lowering your HSA deduction.

Retirement Plan Contribution

Important as it is to save for retirement, if you need to increase your take-home pay, reducing your pretax deduction for a company-sponsored plan such as a 401(k) or 403(b) may be in order. Although it is commonly advised to contribute the maximum, your day-to-day needs may require putting less money into your company-sponsored savings plan. You'll probably want to keep contributing at least the amount required to receive any matching contribution from your employer. Review your retirement needs carefully before making any changes. You may even want to consult a financial professional.

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