Friday, March 9, 2012

A Tax Refund is an Interest Free Loan to Uncle Sam

by Kevin McKee

Some people love their tax returns. They feel like they are getting a bunch of free money from the government. Unfortunately it’s not free money; it’s your money! And if you’re getting a big tax return, that means you’ve been missing out on your money for as much as 16 months.

This is especially harmful for people who are living paycheck to paycheck. I’ve known people who have been slammed with huge late fees and interest payments because they didn’t have enough money, and then they get a $3,000 refund check the next year.

If you’re getting a $3,000 refund, that means you could have had about $250 of extra income every month last year. Instead you let Uncle Sam hold onto it.

Your goal should be to get the smallest refund possible. That way you get to spend your money as soon as you make it instead of letting the government hold onto it.

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