If you have a simple situation (1040EZ), they're probably fine, but I'm skeptical of them for more complicated situations. I just use trial and error. If I overwithheld the previous year, I'll bump up my exemptions by 1 (2 if I'm way off). Then in 6 months, I'll do a dry run of my taxes and see where I am again. I might tweak it again.
At the same time I'll see if I need to tweak my 401k contribution. I might raise it or drop it a percentage or two to make sure I hit the max at the end of the year.
I know some people prefer to owe a little bit on their taxes at the end of the year. I'm not fanatical about that. I like to err on the side of about a $500-$1000 refund.
|