[hokie96]

I was wondering if anyone had any opinions or advice about changing any withholding from your paycheck that goes to federal each month and getting that back during the year instead of in one lump sum after you do taxes. (of course after the adoption tax credit is gone, you would change the withholding back to normal) - I hope this makes sense.
Thoughts?....

[proudmommyof 2]

That's probably a lot smarter to do. Anyone in the financial world tells you not to let the government use your money for the year...


That being said, I hate to count my chickens before they hatch, and I'd hate to have them change the tax credit and have me end up owing money.

we just take the lump sum. We're not in the financial world. :-)

[Beaglepup]

That's exactly what we are doing. Our accountant advised it. Although I'd like to get a lump sum check, this probably is the better thing to do since you can be using the money all along and making interest on any of it you do save. Since we used an equity line for part of the adoption, my DH thought it was best to do it this way and pay as much as possible on the equity line as soon as possible. We'll see how it turns out in March when we meet with the accountant to have our taxes done.

Note: We had them not take any Federal taxes out for the past year. Your accountant should be able to advise you as to whether or not you should do this or just cut back on how much they take. I guess it all depends on how much you make.

Good luck!

[Kendal]

We did that last year and still got back a pretty big check. My FIL advised us to do that (he's a retired CPA).

[Jim_in_PA]

My opinion is thus: Do NOT withhold any more than you need to to cover your normal liability. There is no good reason to give the IRS an interest-free loan throughout the year. It's your money. If you consider your "tax refund" as a form of savings; have some money that you know you will not miss automatically deducted from your checking account each month and have it flow into a "high" interest bearing account with ING, ETrade, or simliar. (I do this for both savings and to cover local earned income taxes that I cannot get withheld)

Adoption is a special case and I suggest you do not adjust your withholding to reflect any anticipated tax benefits...the reason being you have no assurance of the timing and you cannot begin to claim the credit until you actually complete your adoption. There is too much that can affect the "when" of that completion. Nor can you fully anticipate what your credit will be for a given year until you do your taxes. Remember, it's a credit against taxes owed, not a "check" for ten grand. And in some cases, you may need to take it over several years, depending on your tax liablities.

[melindam2]

I did that all last year, only had a total of $300 withhold for the year, saving me about $900 per month! And I still got over $1,000 back!

[Katie63011]

We did that with our first adoption, about 1/2 way through the year when we knew it would be completed by year end, we changed to something crazy like 9 withholdings. It gave us more $ to pay outgoing adoption expenses with. We still ended up with a very nice refund as well.

This adoption, we didn't want to chance having the money withheld and not having the adoption completed in the same tax year. It came down to the wire - came home on Dec 30th. If there is chance that you won't complete the adoption in this tax year, I would be careful.

[Happy123]

My husband is claiming 9 also. But, I anticipated his income for the end of 2006 and figured it using this year form to make sure it came out positive.
With 5 kids at home and 1 out on her own, I would rather have the money thru the year than just at the end.
I know we will still get a return at the end of the year, just not as big.