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Tax Prep & Filing

How to Keep Your Tax Refund Safe (and Get Paid to Do It)

Federal and state tax authorities are slowing down refunds in an all-out-effort to reduce the chance that a bad guy will get your money before you do. Why wait next year? Instead, use our calculator and get your refund for 2016 in installments starting next month.

Here we go again: As tax-filing season gears up, so does the epic battle between 100-million-plus taxpayers asking for refunds and the growing army of crooks trying to beat them to their cash.

CALCULATOR: Set Your Withholding Right

The IRS tries to sniff out suspicious returns. The agency says it stopped 4.1 million phony returns in 2013. The system is not perfect, though. About 1 million fraudulent returns sneaked through that year, netting the crooks nearly $6 billion in other people’s refunds. In 2014, according to the National Taxpayer Advocate, about 180,000 legitimate returns were flagged as potentially fraudulent, making the honest taxpayers wait an average of 18 weeks to get their money. And in 2015, the “false positive” rate identifying suspicious returns hit more than one-in-three. The state of Illinois has announced it won’t issue any refunds until March 1 at the earliest, and other states are likely to slow things down in an attempt to tamp down on fraud.

Honest taxpayers, of course, root for the government to succeed. But still, it’s a pain to have to wait for what is, for many, one of biggest checks they’ll get all year.


As identity theft becomes more and more common, the primary advice for protecting your refund is to file early in hopes of beating the crooks to your money.

But we have an even better idea, a surefire way to make sure you’re not a victim: Don’t put yourself in the position of asking for a refund in the first place.

That’s right: No refund means no chance of losing it to fraud or being forced to wait weeks after filing to get your hands on your money.

Of course, we Americans love our tax refunds. Last year, the government sent out nearly 110 million of them. The average amount: $2,785.


But maybe the thought of losing your money to an identity thief and having to battle the bureaucracy to get it back will convince you to follow our long-standing advice to fix your withholding. If you don’t let the IRS dip too deeply into your paychecks, you won’t have a fat refund at risk next spring.

How to do it

The amount of income tax withheld for the IRS is controlled by the number of allowances you claim on the W-4 form on file with your employer (not the IRS). The more allowances you claim, the less tax is withheld. To change the amount taken from your checks, simply ask your company’s payroll office for a W-4 or download one here. Once you give a W-4 claiming extra allowances to your employer, withholding will drop and your take-home pay will rise. Consider it a way to get next year’s refund in installments starting on your next payday.

Ah, but how do you know how many allowances to claim? Worksheets that come with the W-4 will help, and you can get detailed instructions in IRS Publication 505, "Tax Withholding and Estimated Tax". Or you can slog your way through the IRS's online withholding calculator.

But there’s an easier way. If your 2016 financial situation is likely to be similar to 2015's, take advantage of Kiplinger's Easy-to-Use Tax Withholding Calculator. We’ve updated the calculator for 2016. Answer three simple questions (you'll find the answers on your 2015 tax forms), and we'll estimate how many additional allowances you deserve. We'll even show you how much your take-home pay will rise starting next payday.


Your goal is to match withholding as closely as possible with what you’ll actually owe for 2016. The IRS can’t penalize you for underwithholding if you fall short by $1,000 or less. (Owing a small amount with next year’s return guarantees that you can’t be inconvenienced by an ID thief who files for a refund in your name. If the IRS pays a fraudulent refund, it’s not your problem.)

Our quick-and-easy method is a helpful guide, not gospel. As noted, it's based on the assumption that your financial life hasn't changed dramatically. If you have a new baby, get a new job or have an adult child who qualified as a dependent in 2015 but won't in 2016, for example, the calculator won't reflect how such events will affect your tax bill.

But for most Americans, our calculator will paint a reliable picture. That, in turn, should accomplish two important goals:

1) Get you motivated to grab a W-4 to pinpoint how many extra allowances you should claim; and

2) Get you more of your money as you earn it.

For years, we have called this a do-it-yourself tax cut for the 75% of taxpayers who habitually get refunds. From now on, we’re calling it our do-it-yourself-tax-cut-and-refund- protection strategy.