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Thanks, Fools! That's some great guidance. Much appreciated.

Sounds like I should make my best estimate excluding the move-related items with Taxcaster's help, set my withholdings accordingly, and review every few months, particularly if my actual earnings start coming in well above or below those estimates. I didn't know Taxcaster existed -- that looks like a great tool.

The question that I would ask is - if you get that extra money each 2 weeks/month, do you have a plan to actually use it in a way that will profit you significantly more than getting it all back as a refund, and putting it to work then would? And how does that extra profit compare to any potential penalties and interest from not meeting a safe harbor?

As for that particular point -- my new location is in a higher cost of living part of the country than my old location. For instance, the house we moved into cost about $100,000 more than the house we moved out of, even though it's about 1,000 square feet smaller. It also needed some TLC to get it ready for habitation by a family of 6 vs. the widower that lived in it alone, previously. [Despite being more expensive than the come-from house, it was a reasonable price for the go-to area, with that reasonable price coming in part from condition. A comparably sized house in the neighborhood in no-obvious-help-needed condition was asking ~$40,000 more than we ended up paying.] State income & disability taxes, car taxes, fire department taxes, Food, clothing, electricity & natural gas, phone, and Internet are also all more expensive in the new location than the old location.

Even with the company's help, the move ate through our cash including our emergency fund, and the higher cost of living location means rebuilding that cash is slower than we'd like it to be. We've stopped investing new money and have started taking a major chunk of our dividends as cash instead of reinvesting them in order to rebuild the emergency fund and other short-term savings targets.

Getting the withholdings close to right for 2016 vs. an anticipated over-withholding based on prior-year safe harbor will:
* Speed up the time it takes to get that emergency fund and other short term savings rebuilt.
* Give us a better month-to-month buffer vs. the higher cost of living area we've moved to.
* Let us return our dividends more quickly to focus on compounding as investments instead of sitting as cash building an emergency fund.
* Enable us to more quickly resume investing cash to our longer-term, still unmet goals such as our children's educations.

Given prevailing interest rates and our plan for the money, I'd rather have less in a savings account and not pay the penalty vs. have more in the savings account and pay the penalty. At the same time, I'd rather speed up the emergency-fund rebuilding process, both from a peace-of-mind perspective and from a get-back-to-investing perspective. So for 2016 in particular, getting our withholdings close to right is a more important goal for us than usual. Hence the original question.

Regards,
-Chuck
Inside Value Home Fool
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