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W-4 finagling may lead to regrets

July 30, 2006

Enjoyed "A Little Cash Relief Is as Close as Your W-4 Form" [July 23], however, I have to say that as a CPA who has done more than 1,000 tax returns for over 30 years now, simply suggesting decreasing withholding to increase cash flow totally ignores reality.

Human nature is such that most clients want some money back at tax time. April is the worst month of the year financially, highlighted by property taxes, car insurance, paying off Christmas bills, etc. If clients don't even get enough of a refund to pay my bill for tax preparation, they are not happy campers.

They invariably forget that they changed their W-4 because of some financial planner or newspaper article advice, and when they don't get the usual refund they were expecting, they are crushed and wind up charging their property taxes or borrowing on credit cards.

Yes, it makes sense to break even at tax time and invest the additional withholding during the year. Only problem is that very few people do it.

Like water seeking its own level, the average taxpayer's spending rises to the level of their take-home pay, and that's just the way it is. Please try to relate to the real world when recommending this financially sound but impractical course of action in the future. You make it sound so easy, and unfortunately, it is not.

WAYNE OTCHIS

Del Mar

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