Tax time is a nightmare but most people look forward in receiving a lovely big fat tax refund. Anything over a thousand dollars is a bonus and let’s be honest there are a hundred different things you can do with it. However, while getting a large refund may seem great it isn’t always and in fact you really don’t want a big refund but why? Why is it large tax refunds are bad for us?visit this link for more additional tips.
You Have Been Overpaying On Taxes All Year
First and foremost when someone receives a large refund after their tax returns have been processed, they have essentially been overpaying. Overpaying a few hundred dollars isn’t too bad but when you reach the thousand dollar mark then it’s getting ridiculous and it shouldn’t happen. Unfortunately hundreds of thousands of people overpay and essentially they’re taking money out of their own pockets. This is money they didn’t need to pay and its money they could have used on other important expenses during the year.
You’re Technically ‘Loaning’ Money to the Government with Zero Interest
Most people don’t really think about what it means to receive a large refund. You have handed over money each month to the government and they’re basically holding onto it until the end of the financial year. Now, this isn’t terrible but just think about all the interest you’ve lost? If that money was still in your bank account you would have accumulated interest but not when the government holds it. You may get your money back in the form of a tax refund but that’s really a loan and one you don’t get interest back on. You’re losing out big-time and it’s wrong.
Think About Inflation
Every year in Australia, (as in most countries) there is the process of inflation. This is really all about how costs go up slightly and how money may not be worth the same as it was twelve months ago. However every time you allow the government to keep your money because of overpaid taxes then you are losing money. Inflation over the course of a year could end up costing you twenty of thirty dollars and while that isn’t a huge amount it is money you didn’t have to lose. Filing a tax return every year is of course important but checking how much you pay each month will be equally important so you don’t overpay.see more reviews at http://economictimes.indiatimes.com/wealth/personal-finance-news/tax-refund-claims-worth-rs-1-23-lakh-crore-pending-with-i-t-department/articleshow/53557994.cms
It Is Your Money
Large tax refunds are nice but they could have been used to help ease monthly bills. Most people stress when their pay checks don’t stretch far enough but with the amount of money you receive from your refunds, it could have eased the tension. It is your money and it could’ve made such a big difference to your household.
Keep Your Refunds Low
You may not believe so but it is actually good to keep your tax refund low or at least as low as humanly possible. A lot of people don’t realize these refunds aren’t a windfall as it’s your own money and not free money the government is handing out. Ideally you don’t want a refund and you don’t want to owe anything either. That is why it’s important to check your taxes and find out how much you’re paying exactly and take steps to stop overpaying and of course, ensure everything is declared on your yearly tax return too.