10 Ways to Fight Back Your $1,000 Payroll Tax Hike

how to get more back at tax time


Feel like your paycheck is getting smaller? You’re not imagining it: The two-year reduction that decreased the payroll taxes you pay from 6.2% to 4.2% of your salary were allowed to expire at the beginning of the year, which means that a family with a household income of $50,000 will now have about $1,000 less to spend this year.

A thousand bucks is serious money, but losing that take-home pay doesn’t have to be as scary as it sounds. On a month-by-month basis, your income will drop by $83 and change. With a little creativity, you can shave that much from your budget each month without a great deal of sacrifice.

We’re assuming you already know that skipping the $4 daily latte habit or canceling cable can get you there. Here are a handful of other ways to make up the shortfall, courtesy of a group of personal finance experts we surveyed.

1. Hit the dollar store. Self-described “Dollar Store Diva” Marlene Alexander did an experiment where she logged everything she bought at the dollar store over the course of a week and compared what those items would cost at a big-box store. Her savings: $22.40. “Over the course of a year, those weekly savings alone would add up to $1,164.80,” she writes. Needless to say, perhaps, this means restricting yourself only to items you would have purchased, for more, elsewhere.

2. Drive 25% less. A family that goes through 90 gallons of gas a month (that comes out to roughly 1,000 miles per car, assuming two cars per family) last year spent an average of $324 every month, according to Oil Price Information Service. If you can swap out one quarter of those trips behind the wheel with walking, carpooling, or bicycling, you’ll be $81 a month richer.

3. Shop smarter . “A household with a $50,000 income will spend between $7,500 and $10,000 on food throughout the year,” says Gary Foreman, founder of The Dollar Stretcher. He says you can shave 10% to 15% off this total with a pricebook, which is either a spreadsheet or just a series of notebook pages you divide into columns with a ruler. In the boxes, you record the cheapest unit price paid for groceries, where and when you bought them. Keeping a record lets you see at a glance what the best price is, and where and when you’re likely to snag the best deals.

4. Cut out interest. If you switch $7,000 from a credit card or cards on which you’re paying 15% interest to a card that offers 0% on balance transfers,

you’ll save between $87.50 and $76.19 in interest each month over the course of the year. Look for a card with a 0% introductory period of 12 to 18 months so you can either pay off or significantly reduce your debt in that time period — and resist the temptation to run the balance on the old card back up.

5. Wait until next year to upgrade your electronics. According to the Consumer Electronics Association, the average family spent $961 on electronics last year, thanks to our seemingly insatiable appetite for smartphones, tablets, HDTVs, and other gadgets. If you have a true emergency — say, if your phone falls in the bathtub — buy refurbished, which can save you 50% or more off the price of new electronics.

6. Get to work. “Take on a small side job, like walking a neighbor’s dog,” suggests Julia Scott, who blogs at BargainBabe.com. Hit a free site like Craigslist.org to look for gigs or advertise your services, or put the word out on your social networks that you’re looking for a little extra income.

7. Skip the bar. Ashley English, author and blogger at Small Measure. suggests that people who like to hit their local watering holes with friends have a “drink staycation.” Going out once a week and paying for two rounds of drinks can add up to $20 or more, she points out, so cut out that happy hour or after-dinner gathering. A group of friends can rotate hosting to cut costs and still go out for a good time .

8. Quit smoking . Half a pack a day is costing you $79.65, according to Smokefree.gov. And that’s if you’re paying the national average of $5.31 a pack. If smokes cost more in your state, you’ll save more by quitting.

9. Stop using storage units. The National Foundation for Credit Counseling suggests ending the practice of forking over good money to store all the junk you don’t use anymore. “It’s a double-play to sell the contents… money in the pocket from the sale, and no more rent payments,” the NFCC says. Eliminating the rent payment alone could save you $80 or $100 or even more each month. Better yet, sell some of that stuff you don’t use online and get ahead on next month’s saving.

10. Brown-bag it. “Bring your leftovers to work for lunch,” says Katy Wolk-Stanley, who blogs as The Non-Consumer Advocate. Even if you and your spouse stick to $5 sandwiches or combo meals, swapping those out for last night’s chili or lasagna twice a week will save your family $20 a week.

Source: business.time.com

Category: Taxes

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