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I've read a few posts about fellow Fools tracking their taxes throughout the year to avoid under-witholding or over-witholding taxes by tax time.

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I do this monitoring for my own taxes. The procedure I prefer is to use last year's tax forms to calculate this year's taxes. For example, when I get my pay stub for March, I'll figure out my pay for the year, and plug and chug with that number to ensure I'm okay for this year's taxes. If I'm too far out of whack, then I make an adjustment to my withholding to get back on track.

There are problems with this approach. For example, the tax code changes from year to year -- sometimes dramatically. Also, makeing changes to withholdings sometimes yields surprising results. However, this approach seems to be the least awful of several poor choices.

David Jacobs
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