As tax season winds up, many people have receive hefty refund checks, or are eagerly checking their bank accounts to see when the money will arrive. While a surprise infusion of cash is hardly a bad thing, there are many reasons why you do not want to get a tax refund each year. To understand why, you'll need to understand the basics of how income taxes work. And for that, I have spent the day working on my non-existent Power Point skills. And then my non-existent HTML skills. Oh, and then my .wmv and YouTube skills. It has been a voyage of discovery.
Obviously, I'm not going to win any Power Point Ranger awards for this, but I hope it hits the important bits and makes it easier to understand.
So, on to my list:
Five Reasons You Don't Want A Tax Refund5. People tend to overspend tax refunds. They blow it on something big, then spend even more because they "just got their tax refund!"
4. Tax refunds can be garnished for unpaid student loans, unpaid income taxes, child support, alimony, and interest and fees on previous tax returns.
3. Refunds can be delayed, indefinitely, for a variety of reasons.
2. Your overall cash management will be better if you have the right amount withheld in the first place.
and the Number One reason not to get a tax refund:
You're giving the IRS a loan, and they don't pay interest.
A big tax refund may seem like a windfall, or a good thing, but all it means is that you've had too much withheld over the course of the year. Change your withholding to accurately reflect your tax situation, and you'll get more in your paycheck and won't get a big tax return. You can use the IRS withholding calculator to make a good estimate of how much you should be having withheld, and change your withholding through myPay.