Take five minutes to look at your W-4 form. Adjusting the number of allowances you claim on your W-4 form can instantly increase your paycheck and prevent you from giving Uncle Sam an interest free loan. Every allowance you claim equals about $690 in taxes withheld from your paycheck.

If you owe Uncle Sam, divide the amount you owe by $690. Then, lower your allowances by the nearest whole number you come up with. For example, if you owed an extra $1,500 in taxes, you should reduce your allowances by two ($1,500 ÷ 690 = 2.17). Ask your payroll administrator for a new W-4 form and make the change. Your employer will withhold more from each paycheck, but you'll avoid an unpleasant surprise at tax time next year.

If Uncle Sam sent you a refund check last year (lucky you!), you should raise your allowances by one for every $690 you received.

Changing tax rates isn't the only thing that affects your allowances. If you bought a home this year, you may want to add allowances (since mortgage interest is deductible); if you refinanced at a lower rate, subtract allowances using the same formula. Also, if you started contributing to a 401(k), add allowances; if you stopped contributing, subtract allowances. Just use the worksheet on the back of your W-4 to recalculate how many allowances you can add or subtract.

The IRS is basically a big bully. It tries to prevent other people from evading their taxes by intimidating law-abiding taxpayers like you. Stick to your guns, take every deduction you're entitled to, and you'll come out a winner.

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