2009 Employee Federal Tax "Break"

2009 Tax Break for Employees
This is a good one, and rather complex. From everything I have heard, the “tax break” was actually a re-writing of the withholding tables, not a tax refund. That means that your refund, if you typically get one every year, will be about $504 (36 weeks at $14 a week) less than it usually is. OK, so your refund is smaller, no big deal, you are paying the money back.
But, if you have calculated your exemptions closely on your W4, and you typically owe a little every April 15, there could be a problem. You could end up owing another $500 or so. Get with your HR department, and adjust your W4 exemptions accordingly.
Also, if you typically get large refunds, WHY? Let’s say you usually get about $1700 back every year. Now, we know about the $500 surprise, so we will deduct that. Now we have a $1200 refund every year. That is about $100 a month, if you put that into something as simple as a savings account, you would have $1200 plus interest at the end of the year, maybe about $1250 or so at today’s rates. If you do that for 30 years, at only a 2% return, that is $47598. After Taxes.
Typical stock market returns are a lot better, from Mid March thru early June 2009, the Dow is up about 35%. One Hundred Dollars in the Dow in March would be worth about $135 a few months later. Saving for you beats the heck out of Social inSecurity.