I’m not sure if anyone really looks forward to tax time? Collecting all your tax forms either paper or electronic, finding a tax preparer or trying to work through it on your own via an online program. Will you get a refund? Will you owe the government? Or will you break even?
My husband and I choose to have more money taken out of our paychecks, so that we have a refund each year. I know that some people think that is crazy and say “why would you let the government use your money for free? Why wouldn’t you just put that money into a savings account where you can draw interest at least?”
I used to do taxes for a living and I saw so many people end up owing at the end of the year. Unfortunately many of them were unprepared to pay those taxes before the cut off date. So then they had to make payment arrangements which put these people in extreme stress of trying to figure out where that money was going to come from. On top of that now they were incurring interest and fees each month. It was a rabbit hole that they couldn’t see their way out of. That is unnecessary stress that I don’t want to put myself through.
So, for our family we have different factors that play into our decision besides trying to avoid the stress of owing the IRS. For one we are old school, it is how we always have done it. Our income can fluctuate which could put us into a lower or higher tax bracket. Our kids are also getting older and we may not be able to claim certain tax credits or claim them as a dependent. Most of all we like to get the lump sum at the end of the year.
Yes, we could put the money into a savings account, but there is always that temptation to spend it. And sorry but to be honest temptation can get to the best of us. We choose to use the refund by paying outstanding bills, home & property upkeep, season passes to an amusement park, and putting into our savings account.
So, tell me what do you do? I would love to hear from you about why you choose what you do? How did you figure it out to break even? Are you able to save the money that you would pay in or do you spend it on weekly bills as needed?
*If you want to file your taxes online here are a few options: