Good to “see” you again. This is an excellent question.

The best way to ensure you don’t owe the government money is to use a calculator to estimate the right number of allowances to claim on Form W-4 (which determines how much is withheld from your paycheck.) There is a calculator at the IRS website (search for “Withholding Calculator” from http://www.irs.gov Total Candor also has a calculator, available here: http://www.totalcandor.com/calculators/401k.php

From a financial planning perspective, owing money to the IRS is actually a good thing. Doing so means you held on to your money as long as possible, earning interest on your savings the whole time. Of course, this statement assumes two things. First, that you actually save the additional net pay you collect so you have enough to pay the IRS next April. The second assumption is that you will still withhold at least 90% of your total tax. So, while you can owe up to $1,000 if your total federal income tax for the year is $10,000, you can’t owe $5,000. If so, you’ll be subject to a penalty (not good).

Be careful, but don’t become overly cautious. If you are routinely getting large federal income tax refunds, make a change to your withholding. You don’t have to go all the way to the point you owe, but at a minimum, lower the amount owed to you. Start collecting now.

(Be sure to look at the calculator again in January to reflect the full year.)