I've read in many posts where folks say things like "If you get a large tax refund each year, you're loaning your money to the government at 0% return. Change your withholdings so you don't do that." I realize this is probably a dumb question, but ... I do get a large tax refund each year; about $4k. I think to change the withholdings, I'd do some paperwork with my HR department. What I do not understand is what I need to change it to? I vaguely remember filling out a form -- W4 I think -- when I started working there 8 years ago, and it asked how many exceptions (or maybe exemptions?) I had. I think I put 4.
Here's my situation, as I assume that's how it's calculated. Single mom of 4 kids, one of whom is now 19 and in college; the others are under 18. I make $55K per year and own my home. Vermont does have an income tax as well. This past year with my raise, I found I no longer qualify for the Earned Income Tax Credit and won't going forward.
How should I change my tax paperwork so that I am not having too much taken out, but hopefully do not end up owing anything either? Thanks for your help!