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Should the Average American Be Getting a Tax Refund? — The Motley Fool

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In fact, part of why so many staff get refunds is that they’re afraid of owing money to the IRS during tax season. But this is a simple treatment: For those who modify your withholding to collect more every paycheck, you’ll be able to take that extra cash and put it in a dedicated savings account. When you find that you simply want that money through the yr (say, to cowl an unplanned invoice), it is yours to make use of instantly. Otherwise, you possibly can let it gather interest over the course of the yr. Then, if come tax time, you discover that you simply did underpay your taxes, you’ll be able to dip into that account to pay the IRS its share and maintain the remaining, including your curiosity revenue, for yourself.

Keep in mind, a tax refund isn’t the identical as a present or a bonus; it is money you earned but failed to gather at a time when it might’ve higher served your needs. And once extra People understand this, they will take steps to cease getting refunds and start getting their cash sooner.

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