52 Weeks: Taxes: Tax Refund

From the book:

“Let me take a moment here to emphasize the difference between a “tax return” and a “tax refund.” A tax return is the tax form you file each year, such as the 1040. A tax refund is money you get back because your employer withheld more tax than you ended up owing.

Most articles on personal money management think it’s a bad thing to get a big refund. They say you’re letting the IRS use your money interest free all year. You could have the use of it yourself if you change your W-4 form to have less money withheld from each check.

This is true. But my own experience is that if I get the money in each paycheck, it vanishes. If I get a large refund of overpaid tax, then I have a lump sum to do something useful with. Some years I have used a large refund to fund my IRA account.”



Marie Brack is the author of Frugal Living for the 21st Century: Adventures in Using Your Money Wisely. It’s available on Amazon.com in both Kindle and paperback versions.



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