Tis The Season Again

Hi Everyone,

I have blogged about this problem previously, but this is an important issue, if you want to keep more of your hard earned money. So please take note.

If you live and work in New York State, this is the time of year that you can get ripped off by the Empire State. After working during the previous calendar year, each paycheck you receive has taxes deducted by the federal government, by the state, (if they have income taxes), by a city and other entities if applicable. So like clockwork, you have to file your federal and state tax returns by April 15th. So how do New Yorkers get ripped off by their state? First of all, let me state that since I have only lived in New York State, I do not know if other states do what New York state does.

So what does New York state do? If you received a tax refund from New York for the previous year, New York tax code states that you have to include that tax refund as part of your income for the year in which you received it. So what does that mean? It means that you already paid New York state taxes from each paycheck and then since you received a refund, you now have to pay taxes again on that same money. Doesn't make sense does it? Well it does make sense if you are a law maker and want more tax revenues. But the bottom line is that all of us living and working in New York get the dubious honor of paying double taxes on the same money, if you received a state refund.

So what can you do? To my knowledge, there is only one way to stop the double taxation dilemma. How? You must adjust your W-4 with your employer. Adjusting it means, that you have to increase the number of deductions you claim that is proportional to the amount of the New York state refund that you received. This means that you will actually receive a bit more money each paycheck and consequently, you will receive little to no tax refund from the state.

Don't let the tax collector get the better of your hard earned money. Bypass the double taxation by getting your usual tax refund in small incremental increases with each paycheck. Why pay the extra taxes? This is a no brainer.

Til next week.

Peter