Tax Refunds. Boo?
Mar. 2nd, 2023 09:26 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
canyonwalkerI filed my taxes a few days ago and I have refunds coming. On federal taxes I'm getting back a bit over $1k, state taxes a bit over $2k. Good news, right? Enh....
Don't get me wrong; I like getting money back. But it's my money being returned to me. As I wrote a few years ago, a tax refund is really a tax fail. It's a failure of planning.
It's interesting that some people use tax refunds as part of their planning. They treat it like a savings account. The thing is, when you overpay taxes you are lending the government your money, and they pay you back with zero interest. A few years ago that may not have seemed so important with zero interest rates and near-zero inflation, but nowadays high-interest savings accounts pay over 3.5% and CDs and Treasuries are yielding 5%. People who need help with the discipline of saving would do better to find a better approach.
Don't get me wrong; I like getting money back. But it's my money being returned to me. As I wrote a few years ago, a tax refund is really a tax fail. It's a failure of planning.
It's interesting that some people use tax refunds as part of their planning. They treat it like a savings account. The thing is, when you overpay taxes you are lending the government your money, and they pay you back with zero interest. A few years ago that may not have seemed so important with zero interest rates and near-zero inflation, but nowadays high-interest savings accounts pay over 3.5% and CDs and Treasuries are yielding 5%. People who need help with the discipline of saving would do better to find a better approach.
