Working for a tax company educated me beyond the basics of taxes, which opened a can of worms and piqued my interest in the subject…enough to cultivate my tax education further.
Getting a tax refund is like getting a solid dose of dopamine.
Once you complete your taxes, getting a few hundred or more dollars in a refund feels astronomically good. Right?
Knowing you’re likely to receive a tax return can make you look forward to doing your taxes because it feels like you’re getting paid to complete your taxes. Moreover, the extra income can be helpful.
But if you’re getting a tax refund, you’re most likely overpaying taxes and loaning your money to the government over the year.
Yuck. Yuck. Yuck.
What happens throughout the year for people who receive tax refunds at the end of the tax cycle is they give over their tax threshold, which creates a debt the government owes them at the end of the tax year.
I used to be one of those excited people thirsty for their tax refund. But no more. I would rather pay than receive in this instance.
Two things to note:
As your income increases, say goodbye to tax refunds (usually).
Don’t wait for a tax refund to bring in some extra cash.
Instead of loaning your money to the government for a year, a better option is to take fewer taxes out of your paycheck. It provides more money throughout the year and keeps more in your pockets.
Paying less in taxes throughout the year might feel deceptive to some because you’re receiving more money since lower taxes are being subtracted from your taxes, but it’s the best way to go!
If you’re putting money away throughout the year when the tax bill comes at the beginning of the year (e.g., you can use your emergency fund or set a percentage aside based on your tax rate (better option)), you can afford that incoming tax bill.
Want To Decrease Your Tax Burden?
You can do other things, such as having your own business, which will help decrease your taxes due each year.
Business owners and corporations receive plenty of tax perks and breaks since they boost the economy by creating (employers) instead of taking (employees).
If you’re interested in exploring taxes, one of our most significant yearly expenses, check out these two tax books.
I’ve read, reread, and referenced them multiple times to ensure I make prudent decisions regarding my tax burden.
Tax Book Recommendations
Not only are these books straightforward, but you won’t have to use a dictionary or scratch your head while reading them. Both authors break down complicated tax concepts to improve your tax situation.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.