Its tax season again how many of you gave the government a loan.

tax season

It’s Tax Season…

It has always amazed me how people complain about paying taxes but are more than happy to give loans to the government interest free loans.

I really wish people and banks did the same for me, interest free loans.

Interest Free you say?

The US Government requires individuals to pay by January 15th either 90% of the taxes due for the calendar year or 100% of taxes then they owed the year before. Failure to pay results in fines (penalties) and an interest calculation.

Now, from news reports, the average refund is approximately $2600. This means for the average individual they started overpaying their taxes months before the deadline (which for most people who are waged/salaried really ended on December 31st). For arguments sake, let us say you paid 90% of the taxes owed by mid-November.

This means you started giving an interest free loan starting the next payroll and every payroll thereafter until you filed for your tax refund. In addition, if you filed on April 15th, then you effectively gave Uncle Sam free money from November thru April or about 6 months.

Why?

Why would you do this? Uncle Sam does not give you interest free loans.

I have heard all types of excuses. I, the taxpayer, will never be able to save the money. Wayne you are crazy, we are not giving the government free money. It really is a savings plan (well even though the banks are paying fractional points on your money that still is more than the government is paying).

All I can say is in 2017 try to calculate how much tax you will need to pay and change your W-4 withholding so that on Tax day, April 15th, 2018 you owe Uncle Sam that 10%.