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Refunds: They're wrong!
It's hard to get that through to my clients. But refunds are bad.
Sure, it's exciting to get a check from the Internal Revenue Service. Well, actually, it's from the Treasury, but you know what I mean. That misses the point, however.
It's not like you're gaining anything. That money was always yours. The feds are just giving it back. And that's the point.
When you get a refund, what that really means is that you've given the federal government an interest-free loan. You're just getting your money back.
In fiscal 2008, more than 100 million Americans received tax-refund checks, with an average refund of $2,429, up slightly from the year before. No matter how you do the math, that's a whole lot of interest-free dollars.
No matter how you do the math, that's a whole lot of interest-free dollars.
Originally posted by elevatedone
In fiscal 2008, more than 100 million Americans received tax-refund checks, with an average refund of $2,429, up slightly from the year before.
Wow, I wish I was average. That's 3 times what my Federal refund is.
Originally posted by Crakeur
yes, it is true that the best way to file your returns each year is to wind up with a minimal overpayment or balance due but, for many, that refund is a means of saving the money. Look at it this way. A refund of $5,000 can be reduced by changing your withholding so that you take back an additional $96 each week. This means that you will receive about $100 more each week on your paycheck and you will pay $100 less towards your taxes.
Sounds great but, for many people, that extra $100 winds up being spent, and not saved. So, when taxes are filed, they have had the use of the money but they have nothing left to show for it.
Of course, this is better than giving the government the money to use for a year, interest free but, for many, the loss of use means an extra $5000 that they, otherwise, never would have saved.