My husband told me about a friend of his who’s been claiming “married with nine exemptions” all year. He needed the cash. Jose just submitted a change to single with 0 exemptions at the beginning of November to catch up. Is that a good idea?


Tax Withholding Roulette

Most companies require about ten to fifteen days to change your withholding status. The change you submit in November won’t become effective until December. Perhaps one or two payroll checks will reflect the higher withholding—not the four checks you had intended.

If you absolutely must play tax withholding roulette, submit your year-end change no later than September. That gives you nearly nine months of higher cash flow, and about three months of higher withholdings to cover your tax obligation.

The Best Ways to Save

This will sound simplistic, but don’t spend all the tax money when you get it. Set some money aside, immediately, to cover your future tax obligation.

  1. Employees: Keep your withholding level. Your taxes are always covered.
  2. Self-employed folks: You pay estimated taxes each quarter. Set aside at least 35 to 47 percent of your profits each month (15.3 percent for self-employment taxes, 15 to 20 percent for the IRS, and 5 to 12 percent for state taxes). That’s not your money. By not spending it, you won’t be scrambling to pay it in April.
  3. Folks collecting unemployment or investment income: You also pay estimated taxes each quarter. Set aside at least 20 to 30 percent to cover IRS and state income taxes.

Fun Tricks to Help You Save Up for Taxes

Use coupons every time you shop for anything. Each time you use a coupon, take the money you saved that day and put it into a jar. Each month, deposit that money into your savings account for taxes. Saving just $10 every trip could add up to $500 per year.

Look for coupons online at Kim Rowley’s, Tim Storm’s, or the massive

The Entertainment Book ® is a great value. For about $30 per city, you get discounts to both low-end restaurants and fabulous ones you’ve never tried. It also offers discounts to sporting events, amusement parks, theaters, concerts, and more. Not only will you save money while having fun, but you’ll get fresh ideas. Drop the money you save into that jar.

During one of her lean periods, Patty, a high-fashion model, cut back on expenses. Instead of having her home cleaned professionally, she cleaned the house herself. Patty put the money she saved ($75 every other week) into an envelope labeled CLEANING. She also gave up manicures, pedicures, and trips to the hair salon. Doing it herself, Patty filled envelopes labeled MANICURES ($30 per week) and HAIR SALON ($75 per month). At year-end, Patty’s envelopes contained over $4,000.

What things can you start paying yourself for doing? Taking lunches from home, washing your car, gardening, completing minor household repairs…

Do you love buying books as much as I do? Little by little, the cost adds up. Consider using the library instead. It’s free! Each time you borrow a book instead of buying one, drop money into your jar.

That jar is getting full, isn’t it? Replace the coins with cash regularly, using your own cash. Don’t use those coin machines. They eat up too much of your money and charge about 8 percent or so.

Don’t Forget the Usual Tax Tricks

Naturally, using pre-tax dollars to pay your bills can reduce your tax burden by thousands, so make sure you use those flexible spending accounts.

Taking advantage of retirement contributions throughout the year also reduces your taxable income—and your taxes.

Eva Rosenberg, EA is the publisher of, where your tax questions are answered. Eva is the author of several books and ebooks, including Small Business Taxes Made Easy. Eva teaches a tax pro course at