Tax Refunds Or Not?

By | April 22, 2014

tax refunds

This debate continues, do you pay more each month for your taxes and look forward to the rebate or pay enough hoping that you don’t own any more money to the tax man?

There are pros and cons for both options as to the best action to take, but many people are feeling the pressure of the weak economy and this means that every cent is going to need to work hard. But if you get the math wrong and you owe more than you have paid, are you prepared to pay the fine which is nearly $1000?

If the economy was in a better position and banks actually paid great rates of interest for saving your money, it would make sense that you should be keeping any spare money here. But it is difficult to find an account that is paying more than 1% interest and it can mean that leaving it in these accounts has little value either.

By increasing the amount that you are paying to Uncle Sam, to ensure that you have no fines for underpayment could be a good thing. Also any refunds that are due will be at a good time of the year, just after the festive season.

With the average pay out around the $2000 mark, this is welcomed news and a nice way to start the New Year savings with a boost. With approximately 70% of individuals receiving some form of rebate from Uncle Sam, just shows the overpayments that are happening.

Is there a better way?

Many people do question if there is a better way, over paying by the average $2000 per year could be leaving you short each month for money that you could use to help pay the ever-rising cost of bills.

Is it better to work out the correct amount of tax that you should be paying and just added a few extra dollars each month to ensure that you are not going to be underpaying and receiving a fine?

It is also important to consider the time of the year when Uncle Sam sorts out your tax bill. If you have paid less are you going to be able to afford to pay any extra? Where will you find the money from, just after the festive season?

Considering all these questions before you make your decision, is going to give you the information on how you feel about the taxation system. Do you think that by overpaying each month you are losing out or do you feel that the refund is a welcomed payment at an often-difficult financial point of the year?

There are people favouring the overpaying of their taxes to avoid the possibility of a fine and there are those that pay the correct amount, because they feel that the overpayment is not beneficial to them or the extra money they have provided the government over the period of the year.

Therefore, the choice of overpaying on your taxes is a personal option and one that can lead to many debates. What is your preference?

 

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