It's the Most Wonderful Time of the Year

I’m singing the song in my head as I type. 

It’s tax season!!! 

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All return preparers hate their lives from about January 20 through April 15.  They don’t see their friends or family.  They’re working 10-12 hours, sometimes longer, a day.  But I enjoy tax season.  I love the questions, my phone ringing off the hook twelve times a day because someone’s aunt wants to know if they can claim their dog food as a business expense. 

You’re probably not surprised when I tell you that I’ve already done our taxes.  I start on them about in December to get an idea of what we’re looking at.  We are getting a whopping refund this year…it helps when you have three kids…in daycare.

But actually, getting a huge refund is a financial no-no.  A lot of us, me included, are so terrified of owing a dime to the IRS, we go overboard on our withholding.  Kinda like a forced savings plan.

Can you imagine giving $2400 to your mechanic, letting him holding it all year, actually investing it and earning interest?   Then at the end of the year, he only gives back the $2400. We’d cry thievery!  That’s our interest and earnings! 

Our Money!!!

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People, I am here to tell you that’s basically what you and I do when we get a refund.  They get our withholdings all year, “invest” it, earn interest & dividends, then, on April 15, give you back only the principal.  (Not a big fan of government “investing” anyhow.)

I once heard on the radio a guy complaining that he only got $4 back.  I called in and told him he was the perfect taxpayer! 

Rather than giving your mechanic the $2400, wouldn’t it be so much nicer to have an extra $200 every month?  You could pay off more debt, invest more, give more – whatever place you’re at – you’d have more, to do more. 

If you’re getting a large refund for 2010, you really should change your W-4 to have less withheld this year.  You can find the form (and a handy-dandy calculator) at http://www.irs.gov/ or through your payroll office.  Just complete it and give it to your HR manager.  You can file it any time. 

Now, back to singing…