Your Tax Return Isn’t Free Cash – It’s Your Money!

Your Tax Return isn't Free Cash! It's Your Money!

Tax season is coming up fast and with that comes millions of people anticipating large chunks of cash suddenly flowing into their accounts in the form of a tax return.

We tend to fear the idea of owing the government money. A large payout during tax season sounds daunting so we usually tend to prefer a higher withholding so we can get a larger return.

While millions of people genuinely look forward to their early year “bonus,” it really shouldn’t be something that we look forward to. On the contrary, it’s actually something that could be putting your finances at risk throughout the year.

Let me explain.

Your Tax Return isn't Free Cash! It's Your Money!

It Was Always Your Money

Whether your employer pays your taxes or you pay quarterly taxes, the money withheld (or paid quarterly) is required by law to be given to the government. It’s all part of living in our world today.

But the amount withheld (or paid quarterly) is just an estimate of what you owe your local and federal governments.

When you submit your taxes, you’re telling the government exactly how much you should have paid in taxes the previous year. If you get a return, that means that you overpaid on your taxes. It’s like giving the government an interest-free loan for the year!

Instead of having a slightly higher paycheck every month, you gave the government more of your hard-earned money than they were owed, and then they gave it back to you, interest-free!

Sounds off, right? It is!

Your Tax Return isn't Free Cash! It's Your Money!

Why Is It An Issue?

Okay so you get your money in the end, what’s the problem?

Well, according to multiple studies done in the United States, well over 50% of the population lives in a paycheck-to-paycheck reality, where they are spending their income as soon as it enters their account.

And a whopping ⅔ of the US population has no savings for an emergency.

When the inevitable emergency situation arises (car breaks down, unexpected medical bill, etc.) and you have no savings to cover it, most people will put it on a credit card and be paying it off (with interest!) for months!

Imagine what having a little more in your paycheck every month could do for your financial security – lower credit card debt, increased ability to save for emergencies, more flexibility in your monthly budget.

Instead of assisting your budget, those extra hard-earned dollars are being used by your local and federal government. Where would you rather they be?

Your Tax Return isn't Free Cash! It's Your Money!

What Can You Do About It?

The first thing you need to do is take a good look at your previous tax return. Was it a good chunk of money or was it somewhat small (less than $500)?

If your return tends to be large, then you may want to consider adjusting your withholdings or the amount you’re paying every quarter.

If you generally hire a CPA or other tax professional to handle your taxes, ask them what they would recommend as an adjustment. Tax law changes ever so slightly every year so it’s always best to talk to a professional.

 

Your Tax Return isn't Free Cash! It's Your Money!

In the end, it’s your money – countless hours spent working hard to provide for your family and to grow your business – that money should stay in your pocket as much as possible!

Do you need some help with your tax prep or have questions?

I offer minute consultations for just $15. I’d love to chat with you to help you be as prepared as possible when tax season comes along! Click here to schedule a call for us.

 

Your Tax Return isn't Free Cash! It's Your Money!

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