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Midyear tax tip #3: Adjust withholding

Now that the 2010 tax year is half over, it's time to ask yourself some questions.

Did you end up writing a large check to Uncle Sam that included an underpayment penalty?

Did you receive a large refund check?

If you answered "Yes" to either question, The Missouri Tax Guy Bruce says it's time to make a Midyear Tax Move.

The key is to send the IRS only enough money to avoid interest and/or penalties. It's easy to do by adjusting your withholding.

If you think that you'll owe more taxes this year, adjust the number of allowances (fewer mean you'll have more taxes taken out of your paycheck) on your W-4 or pay more in estimated taxes.

To cure an overpayment situation that you may be facing, consider increasing the number of allowances claimed. That will get you, instead of the IRS, more money each payday.

By making the appropriate correction, you'll get the benefit of owing the IRS the right amount.

More midyear tax tips on their way: Thanks to Bruce and his always timely tip to reevaluate your withholding.

If you have a tax move we can make now to help reduce our upcoming 2010 tax bill, we'd love to hear from you. I'll be posting the tips, one a day until we run out.

If you're succinct, I'll take your tip via Twitter @taxtweet. Got a bit more to say, post it on the ol' blog's Facebook page.

And if you want a chance to win a New Yorker desk diary, check out the details here (the entry deadline has been extended to June 27).

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