As part of the economic stimulus package, for those of you with W-2 jobs, you might have been notified by your employer that withholding rates have changed. This is true, withholding rates have gone down. The problem, the tax rates have NOT gone down. If you change your withholding to the new, current rate, expect either a smaller refund come April, 2010 or, you might even owe something if you have figured your refund closely.

If you are making estimated payments, I would not reduce those payments. If you are concerned, reduce your withholding by one (if you are married with one exemption, go to zero exemptions) or you can add an additional amount of dollars to your current withholding.

 
This information is provided in an effort to help you gather and organize the information necessary to file your individual or small business income tax return. While these financial tools are not a substitute for financial advice from a qualified professional, they can be used as a starting point in your decision making process.