Spring isn’t only a time for cleaning out your house — it’s also a good time for making paycheck adjustments. Your paycheck has important information, but apart from paydays, you may not think about it too often. If you’re on autopilot with your paycheck, you may be missing or forgetting about money adjustments worth considering. Don’t worry if you aren’t sure what you should review or what adjustments you should make.
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We have a list of paycheck adjustments you can make every spring to help you get started.
Withholding Settings
The income tax withheld from your paycheck is calculated based on your withholding settings. Federal withholding settings consider factors like your filing status, the number of jobs you work and the number of dependents you claim. If your marital status changed in the past year, consider updating your Form W-4 to reflect this.
Maybe you didn’t get married, but when you filed your income tax return recently, you owed way more than expected. The balance due may be because of incorrect or outdated information on your Form W-4. Taking the time this spring to ensure your withholding settings are up to date can save you a headache when it comes time to file your tax return again.
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Reallocating Deposits
When you think about your paycheck, your first thought is probably about how much you take home. However, another important thought should be about where your money goes.
Most people have their paychecks directly deposited into their checking accounts. Unfortunately, leaving your money there typically doesn’t pay well. You likely move funds from your checking account to a savings or brokerage account with higher yield rates.
Take time this spring to make adjustments to the amount or percentage you move into either of these accounts to reflect changes to your budget or personal needs.
Tax-Advantaged Savings Account Contributions
Another place you can allocate your paycheck is to employer-sponsored tax-advantaged savings accounts like a 401(k), health savings account (HSA) or flexible spending account (FSA).
Spring is a good time to double-check your contribution percentages to these accounts, as you still have more than half of the year left to build up your contributions or even max them out. Remember, the maximum contribution amounts for these accounts typically increase annually to keep up with inflation and the more you contribute to pre-tax accounts, the less taxable income you have.
Cost of Living Analysis
Typically, the things you need to maintain your lifestyle, like rent, food and transportation, get more expensive each year. Your paycheck should also go up annually to keep up with rising prices.
It’s a good idea to review your raise when you receive it to see if it measures up to inflation. If you haven’t done that, this spring is the perfect time to check. If you realize your rent has gone up more than your raise, consider making adjustments like cutting spending elsewhere or asking for more of a raise to compensate for the difference.
Turn off autopilot and consider these paycheck adjustments you can make every spring.
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This article originally appeared on GOBankingRates.com: 4 Paycheck Adjustments To Make Every Spring
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