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You should begin planning your tax year 2013 return, now that 2012 is in.

Your withholding is the amount of money that comes out of your paycheck every month to cover your taxes. By taking taxes a little bit at a time, the government makes your tax bill much more palatable. Imagine if you had to save up and pay your whole tax bill all at once? Not fun.

Read:Why You’re Waiting So Long For Your Tax Refund

But really, your withholding is based on an estimation of what you’ll owe in taxes. If you’re familiar with the way credits, deductions and exemptions work, you know that many factors affect your total tax bill. When you do finally sit down to calculate your taxes, the reality could be far off that estimate.

The big goal is to get your withholding as close to your actual tax bill as possible. We’ll tell you how to get there.

If you got back more than $3000, that means your withholding was too high. You might have really enjoyed getting a big check from the government, but it isn’t the smartest financial decision. Let’s say you got a refund for $3,000 (close to what the average refund will be this year). That means you gave the IRS $3,000 too much in what amounts to an interest-free loan. You could have had that money in your retirement account instead. Even if it only grew by 1% in a savings account, that is $30 you missed out on.

Now, some people use this as a way to save money. We get it! But a better way would be to set up automatic transfers from your checking account to a savings account, which accomplishes the same thing without getting the IRS involved. Read more here.

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The Tax Move You Should Make Now For April 15 2013  was originally published on elev8.com