The More I Work The Faster My Money Goes

With winter break coming soon students on Planet College are looking forward to - working more. Either more hours at their regular jobs or seasonal jobs or both. Which ever it is most students will once again realize truth of the line from the original rock and roll classic Shake, Rattle and Roll, "The more I work the faster my money goes." Working all week for a paycheck which disappears in one weekend night is a common frustration. The obligations toward friends and family during the holidays does nothing to ease this frustration.

This post is about one more frustration, taxes.

Earnings are taxed just like everything else. Some time next year you will probably owe money on the money you are earning this year. Some of this obligation may be relieved by withholding, the money taken out of your paycheck for your future income tax obligation. When you fill out the paperwork after being hired you fill out among other things a form called a W-4. This authorizes your employer to take out a set amount of your earnings each pay period. This money, a deduction from your paycheck, is intended to pay for your federal and in some cases state tax obligation.

Next year you will receive a W-2, a form from your employers which will detail how much you earned and how much was withheld from your earnings. That is in part an explanation of the frustration you feel when you work more and seem to have less.

Right now as the busyness of the end of the term and the winter break mounts there is little time to stop and examine your financial situation. More work simply means at least some more money right now.

Next year, when you get those w-2s and start doing your tax return for 2010 look carefully at the amount which has been withheld and the amount you will actually owe in taxes. Too much withholding could mean a refund check from the government. Not enough withholding will probably mean you will be sending a check to the government. Either way then would be a good time to look at your w-4 amounts. If it seems wise to adjust them one way or another it will probably be possible to submit a new W-4 to your employer. Check on it.