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- What does the potential elimination of the A.C.A. mean to you? - October 28, 2020
Second Tax Mistake: Getting big tax refunds:
I constantly get people who are thrilled with their big tax refund from the federal and/or state government. Sometimes, I get people who feel that this is their way to save money. In fact, one person noted, “I don’t pay taxes. I just got a refund.”
Getting a big refund might sound good, but you are only getting a refund because you are giving a large amount of money to the government, interest free.
To put this in perspective: would you lend me $50,000 only to receive the same $50,000 one year from today? I bet you wouldn’t do it. The same should be said of giving the government this money. (And often times you don’t get the full amount back!) You need to adjust your withholding and/or estimated tax payments so that you don’t get too big a refund.
Remember Ben Franklin wasn’t totally correct in saying that a “penny earned is a penny saved.” The more correct statement would be , ” A penny saved is better than a penny earned.”