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Adjust withholding to reflect losses

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Q I’ve lost money in the stock market this year, so  I expect to owe less tax than I did in ’05. Can I  decrease the tax withholding at my job to make up  some of the difference? J.G., Tuckerton, N.J. 

A Yes. You can amend your W-4 in midyear to take into  account changes in your personal circumstances,  including stock losses you will be claiming on Schedule D.  But a word of caution: Don’t run afoul of the estimated-tax  rules. The easiest way to ensure that you won’t incur a  penalty is to pay at least 100 percent of your 2005 tax liability  (110 percent if your AGI for 2005 exceeded  $150,000). Tip: Remember that capital losses can offset  only up to $3,000 of ordinary income after offsetting capital  gains.€€

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