Big Tax Refund or Nothing Due
August 27, 2013 Filed in: Tax Forms
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I had a conversation the other day with a client who stated the following, “I always claim zero when I fill out my form W-4, it gives me the biggest refund”. I understand why people do this, I just don’t agree with it. This was a teachable moment and I proceeded to educate him about what his big refund means for him, his family and his bank account. He could have had $200 to $300 dollars each month throughout the year and still received a pretty sizable refund. This would allowed him to put it in savings for a
I think owing the IRS on April 15th is like going to the dentist and being told you need a cavity filled. The size of your refund is the amount of money that you have overpaid the IRS in the past year. The IRS withholds tax based on what you tell them about yourself, your family size and the amount of income your family expects to earn in the coming year. It’s disheartening as a tax preparer to see someone give a large portion of their paycheck every week or month to the IRS as an interest free loan until they file their tax return. Isn’t it better to make it the right amount each year?
Numerous things can affect whether you will owe the IRS on April 15th or if they will owe you a refund. The W-4 form, correctly completed will give you one of two results:
I had a conversation the other day with a client who stated the following, “I always claim zero when I fill out my form W-4, it gives me the biggest refund”. I understand why people do this, I just don’t agree with it. This was a teachable moment and I proceeded to educate him about what his big refund means for him, his family and his bank account. He could have had $200 to $300 dollars each month throughout the year and still received a pretty sizable refund. This would allowed him to put it in savings for a
I think owing the IRS on April 15th is like going to the dentist and being told you need a cavity filled. The size of your refund is the amount of money that you have overpaid the IRS in the past year. The IRS withholds tax based on what you tell them about yourself, your family size and the amount of income your family expects to earn in the coming year. It’s disheartening as a tax preparer to see someone give a large portion of their paycheck every week or month to the IRS as an interest free loan until they file their tax return. Isn’t it better to make it the right amount each year?
Numerous things can affect whether you will owe the IRS on April 15th or if they will owe you a refund. The W-4 form, correctly completed will give you one of two results:
A small refund from the IRS
A small amount due to the IRS
In order to get to this point, you need to follow the directions on the form, or use the handy IRS Withholding Calculator. Grab last years W-2 and your most recent pay stub (your spouse’s also). If you need any help, call me or schedule an appointment.
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