April 18, 2015
Getting a big fat tax refund is not financially smart. Why? Alternate?
Getting a big fat tax refund is not financially smart. Why? Alternate?
If you get a large refund that means that you were giving the government money over that time period that you did not need too, you gave them an interest free loan, there is no reason to do that when you could put that money towards something else such as investments or paying down dept, if you owe a little bit when it comes time to pay your taxes you would have gotten an interest free loan from the government for that time period. You are better off keeping some money in a bond account that you will use to pay your tax debt when it comes time, and get interest on that account over the year.
Not only are you giving your money away interest free, but the refund you get back will be counted as income for the next year, so you wull be paying taxes on it twice. It would be smarter to lower the amount of taxes that are taken out of your paycheck each month so that you can invest that extra amount and receive interest off of it. When tax season rolls around, you should then either owe a little bit of money, or have come as close to breaking even as possible.
Well said. The big refund is not something to brag about. Owing money is!