Getting a Tax Refund- is it always a good thing?
The IRS reported today that with nearly half of this year's taxes filed, the average refund is up nearly $125 to $2,458.
In one way this is good news- extra money in the pocket is always a good thing but if you really think about it, it is a tax refund. That means we over-paid our taxes and the government made interest on our money. IRS reports they have refunded $128.7 BILLION this year so far- that's a lot of interest for someone else to be making on your money.
If you have good self-control, opt to pay less on your salary (there's a tax form you can file with HR) and invest the excess money you save in a high interest account (or invest it in your RSP/401K if you have excess contribution room to lower your taxes). Even if you have to pay more taxes than was taken off your pay cheque, at the very least, you get to keep some of the interest you have earned.
In one way this is good news- extra money in the pocket is always a good thing but if you really think about it, it is a tax refund. That means we over-paid our taxes and the government made interest on our money. IRS reports they have refunded $128.7 BILLION this year so far- that's a lot of interest for someone else to be making on your money.
If you have good self-control, opt to pay less on your salary (there's a tax form you can file with HR) and invest the excess money you save in a high interest account (or invest it in your RSP/401K if you have excess contribution room to lower your taxes). Even if you have to pay more taxes than was taken off your pay cheque, at the very least, you get to keep some of the interest you have earned.
Labels: taxes
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