Warning: This isn’t a typical blog post for me. My target audience usually visits this site for cheap and easy DIY ideas and it feels strange to stray away from my normal posts. While this may be different from my usual posts, it is something that I think everyone needs to think about since today is Tax Day. Please keep reading, I promise this advice can save you money and possibly even make you money.
If you have ever had a legitimate job then you’ve seen this before.
Has anyone ever been overwhelmed by all the questions? I know I have! Starting a new job is stressful and the last thing I want to do on my first day is fill out paperwork. I’m usually too busy wondering if my hair and makeup looks good for my employee ID.
I’m here to tell you that taking the time to correctly fill out this little form can possibly help you make money. Stay with me here. I’m afraid I’m going to lose you since I don’t have any Pinterest worthy pictures in this post.
A tax refund is exactly what it sounds like. It is a REFUND. It is not a gift from the government, it is not extra money that you get at the end of the year. It is money that you earned from your job that the government took because YOU gave them the authority to take it when you filled out your W-4.
I don’t want to get political in this post. I don’t want to debate whether taxes are good or bad. But I do want to stress that if you withhold too much money then you are losing an opportunity to have money in your pocket throughout the year. As Tom’s Uncle Mike puts it, you are essentially giving the government an interest free loan.
Wouldn’t it be great to have a little extra money every month instead of getting a lump sum back at the end of the year? Imagine what you could do with that cash every month. If you took that money and put it into an IRA, you could start saving for retirement. You could be MAKING money instead of letting it stay stagnant.
It takes time to get your taxes just right. Tom and I had just figured out how to come out even on our taxes and then we had several big life changes. Moving, becoming landlords, having a child and quitting my job all threw big wrenches into our well oiled tax machine. We ended up with a sizable return this year and for that I am grateful. We plan to use our return to pay off one of Tom’s loans because we realize that the money is NOT a gift from the government, it is our hard earned cash and we should put it to work for us instead of treating it like Monopoly money.
Here is my advice: if you find that you got a big return on your taxes this year, revisit your W-4 and make changes so you can have that money in your pocket every month. Also, make sure to use that return in a smart way instead of blowing it like fun money.
Maybe you make too much to get a big return and you end up owing taxes every year. You, too, can revisit your W-4 if you find that you don’t have the money to pay taxes at the end of the year. Maybe you would rather have more money in your pocket each month for investments and pay off the tax bill on April 15th. Find what works best for you.
Here is the biggest take away I want you to learn from this post: take the time to properly fill out your W-4. Here is the official IRS withholding calculator. I promise that you can do it by following the directions on the form. You really don’t need an extra online calculator. If you get confused by the math, ask your human resources director for help. I promise, asking for help on this and doing it properly can save you money.
Happy Tax Day everyone! If this post leaves you feeling overwhelmed, check out my post from Sunday about all the Tax Day Freebies. I hope that can cheer you up!