Use the W-4 to your Advantage

It's fairly safe to say that, for most people, filling out tax forms is about as much fun as going to the dentist for an impacted wisdom tooth. They fill them out (or have then done so) to the best of their abilities, but they actually understand very little of what it all means at tax filing time. Some people seem to always pay even though they've done all the right things. If you feel like this is you, then take heart; there's always something else that you can do.

Consider, for instance, your W-4 form. That's the form your employer asks you to complete (along with a stack of others) when you begin a new job. This form determines how much your tax withholding will be; in other words, the amount of money that's deducted from your paycheck in the form of Medicare-, Social Security-, federal- and state taxes. You see, everyone wants their piece of your pie.

However, there is a fine line between too much and too little being withheld. If you have too little money withheld, the government will come down hard on you and ask for all of that money back come April 15th. Conversely, if you withhold too much, you could put yourself in the position of living hand-to-mouth throughout the year just to get a sizeable tax refund. Both ways have a downside. But, W-4 forms do have the advantage of being changeable; you can increase or decrease your withholding as you see fit during the year. And it's not a one-time deal. By simply filling out another W-4, you can make changes whenever you wish.

On the W-4 form, it asks for your withholding allowances. These allowances are for your exemptions, which include your dependents and certain special conditions. You can claim an allowance for yourself, your spouse and your dependents