One – This first one can be hard to believe BUT some people believe a refund is a gift from Uncle Sam. And yes, sometimes I want to bang my head against the wall (look at grumpy cat photo).
Wake up people, it’s your own money. That is why it is called a refund. A refund of your own money. It’s not a gift.
Two – Some people have a fear of having a large tax bill, therefore withhold more than they need to. I get that. This one is easy to understand, as most of us are living paycheck to paycheck. The idea of a large tax bill would be terrifying, As of August 2017, seventy-eight percent of full-time workers said they live paycheck to paycheck.
To address the concern of a tax bill, speak to your CPA (look to the wise owl) to ensure you have the correct allowances on your paycheck. Your CPA is an expert and will be able to provide guidance on what your withholding should be at work.
Three – A lot of people use the tax system like a savings account, they don’t believe they can stop themselves from spending it. Some people don’t have impulse control, it can be hard. We all have different reasons for allowing this to happen.
In reality the extra withholding is a interest-free loan to the government from your pocket. When was the last time anyone, let alone the government, gave you an interest-free loan?
Or if you can restrain yourself from dipping into a savings account at your current bank, then open one there. Next, change how your paycheck is dispersed and let the difference add up.
If you are making one of these missteps, dust your boots off, take charge and make some changes.
Here are a couple more topics regarding taxes – 3 Ingenious Questions to Ask Your CPA and 3 Tremendous Reasons Why Working with a CPA is a No-Brainer.
Information contained herein does not involve the rending of personalized investment or financial advice but is limited to the dissemination of general information. Always consult an expert regarding your personal situation.