Adjust Your Withholding and Mid-Year Tax Planning Ideas

Mid-year is a good time to check your income and taxes withheld to date. If you received a refund or owe money and have not made any adjustment yet, you should make the adjustment to withhold more or less as needed. A large refund represents an interest free loan to the IRS, and a large amount owe could become a financial liability that could cause you even more money and negatively affect your credit score if you are unable to pay.


If you received a large refund previously, consider withholding less money and divert the money to an interest-bearing account, use it to pay off debt, start an emergency fund, or contribute to your long-term investments, such as a tax-deferred retirement plan. If you owed money, or expect a significant increase in income this year, consider withholding more and adjust your budget accordingly.

You can change you Federal and local tax withholdings from your paychecks at any time during the year by filing a new W-4 tax form and/or the equivalent state and local forms with your employer. It can even be changed more than once during the year.

Ultimately, your goal should be trying to break even when all is said and done.

4 Tax Planning Ideas

Additionally, here are some additional strategies that you can leverage to reduce your tax burden.

Reduce Taxable Income

There are several ways for you to reduce your taxable income, such as, donating to charities, contributing to an IRA and/or a 401(k), etc. If you have not started, or you are behind your plan, now is the time to ramp it up so that you have enough time to do these things.

If you have access to an employer-sponsored 401(k) plan, you should contribute up to the pre-tax maximum contribution each year. This helps to reduce your taxable income and gives your retirement savings a nice boost. If eligible, you could also contribute to a Traditional IRA for even more tax savings.

Update Your Record

Do not wait until the end of the year to start organizing your tax documents. Start a file now if you have not done so already and make sure that you accounted for everythign since the beginning of the year. If you wait too long to organize your paperwork, you may forget what you spent money on, or how you paid for it.

Make Decision about Your Medical Expenses

There are two things to consider regarding your medical expenses. If you contributed to a Health Care FSA, evaluate whether or not you will be able to use up the allocation before the deadline. If you are not on track to use up the allocated fund, your money could be lost and you might want to plan the necessary medical and dental procedures accordingly.

Another factor to consider is the itemized deduction for medical expenses. Your eligibility to deduct these expenses is based on a certain percentage of your gross adjusted income. If you are going to be close, you might want to plan your medical and dental procedure so that you can take advantage of the write-off.

Do Additional Research

These are just a few ideas to help you plan better for the tax time. There are other ideas that could help you reduce your tax burden and be more prepared for tax filing. Do your research now and save some money down the road.

If you have other tax planning ideas, be sure to share them with us below.

Photo by

About the Author

By , on Jun 28, 2013
Andy Tenton
Andy is a 30-something New Yorker who turned his financial life around. He took charge of his finances, got out of debt, and is now working his way toward financial success. He is the publisher of

How to Become Rich e-Course

Budgeting 101


  1. Mary Slagel says:

    a 401K and an IRA are both perfect ways to protect yourself from taxes so to speak. If you make enough money, contributing money to both is an excellent way to insure yourself in later years.

  2. krantcents says:

    I usually adjust my withholding after I finish my income taxes. Last year, I withheld too much so I will check sometime between now and September to see if I should lower my withholding. Good reminder!

Leave a Reply

Your email address will not be published. Required fields are marked *

Disclaimer and Stuff

The articles are written by personal finance enthusiasts (not certified professionals) based on their personal experience. What works for them may or may not work for you, and you should always consult a financial advisor before making important financial decisions.

In accordance with FTC guidelines, we disclose that we have a financial relationship with companies mentioned in this website. This may include receiving access to free products and services for product and service reviews and giveaways.

Any references to third party products, rates, or websites are subject to change without notice. We do our best to maintain current information, but due to the rapidly changing environment, some information may have changed since it was published. Please do the appropriate research before participating in any third party offers.

For additional information, please review our legal disclaimers and privacy policy.