Brad Causey
Brad Causey,
Editor and Publisher
R. Shannon Pollard
Kevin Sommers
David R. Wehry
James E. Foy
The Freedom Letter
Tax Refunds Are Bad!
Why a tax refund is a bad idea.
Tax season is upon us again. Most taxpayers have already received, or are eagerly anticipating their tax refund from the Internal Revenue Service. The average refund check this year will be almost $2000.00. What can be bad about getting a check from the government?
Take out your 1040 form and have a look at line 61, this is the "total tax." Line 69 is the total of your payments. If your payments are more than your total tax you enter the difference on line 70. Line 70 says in bold letters. THIS IS THE AMOUNT YOU OVERPAID. Do I need to repeat Overpaid? Ok, Overpaid. You gave them too much money!!!
Let's do some quick math, of the 137 million people in the United States who filed a return last year, only about 110 million actually paid any tax. If the average refund was $2000.00 this gives the federal government an interest free loan of over 200 Billion dollars. This is roughly the equivalent of the total revenue of Wal-Mart last year. If you go to Wal-Mart or the local grocery store and the total of your purchase is $50.00, do you give them 3 Twenties and say, "keep the extra ten bucks for me until April of next year?" This is the equivalent of what you are doing for our friends in Washington. Another example. Let's say your federal income tax bill this year comes to $3000.00. Your W-2 form says they have already withheld $4000.00. (not including Social Security and Medicare) In this situation your refund would be $1000.00. Just because they already have it in their possession, doesn't mean it is not actually your money. If you had the $1000.00 during the year, even a bank would have paid you some interest on it. If you had invested it in a good mutual fund, you would be a step closer to a comfortable retirement. If you had it in a cookie jar, or under your mattress, it would be available for emergencies. Instead you chose to let the government use it for free. Why? Let's look at it another way, if your tax bill is the same $3000.00 and they only withheld $2800.00, you would have to write them a check for $200.00. Not much out of the stash from the cookie jar. Either way, your tax bill is the same.
If you are out of school and have a steady income, you have no excuse to over pay the government. If your refund this year is over $100.00, do yourself and freedom a favor and adjust your withholding at work to take out a little less. While you're at it, go to your bank and set up an automatic deduction from your checking account for savings. Pay yourself, instead of the government. God knows you need it a lot more than the politicians do.
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