Tax Season (to pay or to receive)


It’s the most wonderful time of the year.  No, not Christmas.  The time of the year where Uncle Sam tells us it’s time to ante up.  Most of us look at this time of year with the hopes that we will, through some miracle calculation and a bit of luck, find ourselves on the receiving end of some “free” money from the government.  I’m guilty of this as well, but I remember when I came out of college, some guy tried to school me on this way of thinking.  Walk with me on this one…

When tax season comes around, the thought of paying Uncle Sam anymore money seems absurd.  We’ve watched our paychecks reduced based on the amount of taxes we pay, and then there’s sales tax, property tax, taxes on a tax (not really), and so on.  So the thought of pulling out a checkbook (yeah, I know no one does this anymore) and writing a check to go to more taxes is quite maddening.  We’d much rather have a check sent to us.  I mean, it IS “free” money right, and who wouldn’t want that?  Unfortunately, that way of thinking is backwards.  It’s not “free” money we’re getting.  It’s our rightfully earned money.  Money that was ours, but we let Uncle Sam borrow it for 12 months, and even bigger than that….because we’re so nice, we don’t even ask him to pay interest on it.  He wouldn’t do that for us, but we are okay with doing it for him.  In actuality, this money may have been able to sit in a bank and earn interest (however little it would’ve been), may have been invested, or go toward a home or auto improvement.  Who knows, but at the end of the year, we could write that check and say thank you Uncle Sam for letting me hold onto a little extra to do something additional with.  Here’s what I owe you, and no I’m not paying you any interest.  That’s what we’d essentially be saying, but no.  We (me included) like it the other way around.  It really is a backwards way of thinking.  I’ll have to rethink my practice.  Not saying I’ll change because old comfortable habits die hard, but it’s definitely worth considering.  So do you want to pay or receive?  Think on that.

Just saying

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2 thoughts on “Tax Season (to pay or to receive)

  1. Jim Davidson

    Here’s how I rationalize this: I know that getting a refund means I just gave the government an interest free loan, but I also know that I’d rather get a check for, say, $1000 in March or April rather than 20 extra bucks a week all year. I’d like to think I’d take that 20 bucks a week and invest it or do something useful with it, but in reality I’d just piss it away. With the lump sum the chances are greater that I’ll put it to good use. And with interest rates so crazy low, it’s not like I would’ve made a ton of interest anyway.

    Reply
    1. gtwhitfield Post author

      I agree with you, which is why I don’t know if I can change my way of thinking. I’d like to think that I’d do something useful with it, but chances are I wouldn’t be thinking about it, so nothing positive would get done. Interest is a whole other thing. It’s not a flawless argument by any means, but just makes me think.

      Reply

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