Getting a Huge Tax Refund Isn’t a Good Thing
Tax Day is usually April 15th, but this year it was moved back a few days to the 18th, because of the weekend, Easter, and Emancipation Day, a holiday observed in Washington DC. Do you remember what it was like to get your taxes in at the last minute?
Video courtesy of Amelie Poulain.
Well, with the Internet and e-filing, it's much easier to get your taxes done. And most online tax services will show you your refund grow, as you move from step to step. This could be a problem though. It's not necessarily a good thing to get a big tax refund.
Bankrate.com has an article why getting a big refund isn't a good thing. And it's pretty simple. If you're getting a big refund, you're allowing the government to take too much out of your pay check to begin with.
Lots of people end up using their refund on things like credit card bills. Those bills were probably accumulated throughout the year to pay for things because you didn't have enough money in your bank account. And by having too much taken out of your paycheck means you're giving the federal government a 12-month interest free loan.
If you adjust your withholdings to get an extra $50 per biweekly paycheck, that adds up to an extra $1300 per year you can use on investments. If you do that for 30 years, that'll be an extra $105K for your retirement.