Not Everyone is a Big Fan of "Tax Refund:" Why Overpaying Taxes and Getting a Big Tax Refund is Not So Exciting
Tax planning is crucial if one wants to have a more ritualized savings strategy. Receiving a tax refund does not necessarily mean good news for everybody.
Sales Tax Audit Defense
Based on a survey conducted by the National Foundation for Credit Counseling, 56% of the respondents are anticipating to get a big tax refund each year while only 28% carefully planned out not to receive any. One question that might raise eyebrows is, what’s the fuss with this 28%?
NFCC Spokesperson Gail Cunningham explained that these people who seem to enjoy the much awaited tax refund each year are those who would eventually need to have “extra money” each month. She carefully explained by giving out an example: “A refund of $3,000 adds up to about $250 in extra taxes each month – cash that may make the difference between missing a car payment or bouncing a rent check for many lower-income Americans.” People who are actually not living on a monthly salary are still obliged to pay the Internal Revenue Service what amounts to an interest-free loan instead of putting this money to investments or for other daily expenses.
Despite the fact that tax refunds are considered as enforced savings, if one would carefully assess it, the costs of getting a big tax refund yearly far outweigh the benefits. Instead of having an available money to pay for one’s monthly mortgage, or to have an easy cash in case of emergencies, why would someone choose to overpay the government and then wait for it to return the excess by April? The government would certainly not pay any citizen the amount of the excess in his tax payments whenever someone needed it for emergency purposes.
Checking IRS’ withholding calculator and checking from there the exact amount that should be paid for taxes using the accurate details about one’s self such as the income and current status and dependent information would help a lot to ensure that there would be no overpayment in the taxes for the current year. Of course, form W-4 must always be updated with the current tax information.
And of course, the best way still to ensure that the Federal Income Tax payments will match the actual tax liability is to consult a qualified tax advisor such as those of Interstate Tax Strategies, P.C. who can further discuss specific tax issues accurately.
About Interstate Tax Strategies, P.C
When it comes to Atlanta tax services, Interstate Tax Strategies, P.C. is unique in its exclusive focus on interstate sales and use tax. Ned Lenhart, CPA, is President of Interstate Tax Strategies and has been perfecting his tax consulting skills for over 27 years. Well-versed in sales tax audit procedures, he started Interstate Tax Strategies, P.C. in 2003 after serving as a Firm Director for Deloitte in its Atlanta office. Prior to joining Deloitte in 1994, Ned was a Sr. Manager with Arthur Andersen in Kansas City, Missouri. Ned also worked for the Missouri Department of Revenue where he was the Director of the Compliance Division and led the state's civil and criminal tax enforcement efforts. He also served as Deputy Director of the Division of Taxation and Bureau Manager for the Compliance Division.
interstate Tax Strategies
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