It’s getting to be that dreaded time of year again - tax season. And this year, the tax deadline is on April 18th so keep that in mind as you prepare your tax documents.
While you may consider taxes to be a necessary evil, they don’t have to be as complicated and agonizing as in years past. With tax companies such as TurboTax and H&R Block, the process of preparing and filing your taxes can be done quickly and efficiently.
Once you’ve knocked those taxes out, you can start anticipating the one silver lining of the whole process, your tax refund! The average refund in 2015 was around $2,800!
For many people, a tax refund is one of the highlights to their financial year. It’s like an additional work bonus to be used towards a vacation, a shopping spree, or numerous other sources of pleasure.
But have you ever considered WHY you’re getting a tax refund, and whether or not it actually is a good thing? I know, you’re probably thinking “how could a free refund be a bad thing?!”
Let's break down the pros and cons to getting a sizable tax refund:
Benefits to Receiving a Tax Return
Drawbacks of Receiving a Tax Return
It all comes down to whether you’re a financially responsible person. Do you tend to stick to a budget, track your expenses, save money, and pay off debt? Or do you struggle to make ends meet and live paycheck to paycheck, spending any extra money you get? The answer to that question should ultimately help you decide whether getting a tax refund is a good thing for you.
If you tend to be better at saving money on your own, it’s better to get more money throughout the year instead of a tax refund. However, if saving money is difficult for you, a tax refund could be a great way to force you to spend less. Most people who aren’t good at managing their money won’t have the cash on hand come tax time, and that can be a dangerous scenario. If you do receive a tax refund, we’d encourage you to use that money to accomplish a specific goal, rather than simply increasing your spending.
Take some time and evaluate which of these circumstances you prefer. Then, assess whether you should adjust your withholding on your W-4 form, to have more or less taxes taken out of your paycheck. Overall, there isn’t REALLY a right or wrong answer, but it’s important to know what choice you’re making and why you’re making it. By taking some time and learning some more about the process, you become empowered to make the decision that’s best for your financial situation.
Which side of the debate are you on, tax refund or no tax refund? Let us know in the comments section below! Find all the best coupons and deals on DealsPlus, updated daily! Also, be sure to check out these related posts: