I’ve been working at a summer camp for the past four summers, and when it comes time to fill out paperwork for our paychecks, there’s always various options for how much money we want to take out of our paycheck for taxes (beyond the mandatory social security). I’m confused as to why this option is there, and what would be the benefit to taking more out of the paycheck for taxes?

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Posted by Grace Barlow (MONEY FORUMS: 4, Answers: 1)
Asked on March 6, 2016 10:26 am
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You’ll pay the same amount annually no matter what you put down. It’s just a matter of if you want a lot taken out of your paycheck right away or if you’d rather wait to possibly pay some when you file taxes. The former option is the more expensive one since you lose opportunity cost. The latter option means you get to use your money longer. Just make sure you have money ready when you file taxes since you may owe a little. I like waiting to pay. It keeps more money in your pocket longer. Otherwise, you're just giving an interest-free loan to the government. Either way, it's not a huge difference. But that's what it's about. When you opt to pay taxes earlier than necessary, it's kind of just a clever way for the gov't to get prepaid. Uncle Sam is quite smart.
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Posted by Will Lipovsky (MONEY FORUMS: 0, Answers: 35)
Answered: March 9, 2016 9:35 am