Am I getting a refund or do I have to pay?
Many people view getting a refund as a winning lottery ticket when in fact it is the opposite. If you get a refund you have lent the government YOUR money interest free and the government isn’t paying you back until you get the refund. Of course you don’t want to end up paying more than you can afford and the IRS has penalties if you have not withheld enough during the year.
For instance, if it was allowed, it would be best not to withhold anything from your paycheck and then you could put aside the money you would owe at the end of the year into an interest-bearing account and then make money throughout the year. Unfortunately the IRS does not allow that–you must withhold a certain amount throughout the year.
On an educational note, I have never figured out why tax planning is not taught more effectively (if it is taught at all) in our high schools. It seems to me that a unit on tax planning would be a great benefit to everyone.
Taxes can get really confusing and this infographic from QuickSprout shows you why:
- Early-Bird Taxpayers Gets the Refund (turbotax.intuit.com)
- What People Say on Twitter About Tax Refunds (turbotax.intuit.com)
- Tax Refunds – Better Than Christmas? (turbotax.intuit.com)
- Infographic: Filing Your Taxes Online (turbotax.intuit.com)
- Tax Day Looms; Are You Ready? [INFOGRAPHIC] (mashable.com)
- Visualizing Tax Day (revolutionanalytics.com)
- It’s April 15th, Let’s Learn About Taxes (freetech4teachers.com)