Tax Refund! When we hear those two words, our common instinct is to say, "Show me the money!" It is tax time and most are looking forward to getting back that tax refund. Well, here’s how you can get your tax refund back… the fastest way possible.
It’s tax time. Are you patiently waiting for a tax refund? I don't blame you! The average tax refund based on the last ten years is around $3,000. That’s a good chunk of money, right?
A tax refund is just what it sounds like. It is a refund for giving Uncle Sam too much money. Thus, he gives back the difference.
Tax Refund = Tax Money You Overpaid
For example, if your employer has been taking out $500 a month in taxes (equating to $6,000 a year) and you only owe $3,000 in taxes, then you overpaid by $3,000. You will, therefore, get back $3,000! There are many variables that go into calculating that number. But, when all is said and done, this is where you end up landing. Most people expect a refund, but it doesn’t mean you will always get one. So...
The fastest way to get your tax refund is…don’t send the money to begin with! Do actual tax planning and don’t overpay in the first place. Don’t send out those extra dollars! Now, you saw in my recent video, “Why You Should Use An Accountant,” some of the reasons I think you should file with an accountant instead of TurboTax. But, you should also sit down with an actual accountant and do some tax planning before it's time to file. Unless your income is very complicated, by simply spending a little time with an accountant, you can complete your tax planning rather quickly. You might even wrap up your planning during the free consultation many accountants provide. The point is, it isn’t difficult to complete tax planning but is well worth the investment. Any time you have a taxable event, talk with an accountant—whether quarterly because you have a regular income or yearly because you are self-employed—talking to one is great. Do that! You want to keep tabs on your taxes and avoid sending extra dollars to Uncle Sam. If you don’t, all you are doing is giving him a 0% interest loan for the year.
Now, you aren’t going to get exactly to zero when filing, but think about it... $3,000 equates to $250 per month for an entire year. That's a lot of extra income! So, do tax planning with an accountant in such a way that you get back as little as possible when it's time to file.
Poof. It disappears. Am I right? You may do something smart with it like paying it down on debt, or you more likely do something frivolous like going to the Bahamas, or spending it on a big screen T.V. Either way, you are spending without a plan!
Tax Refund Dollars Without Plan = More Waste
You can use those dollars a lot better than the government can. Now, we don’t want to owe the government, but you certainly can get your tax paperwork to a place where your refund is a lot smaller come tax time. And, as a byproduct, your monthly income will increase. Not only will that lead to more monthly traction towards your goals, but you’ll have more margin in your daily life and expenses!
Keep it in the first place! I encourage you. Sit down with an accountant, do some basic tax planning and avoid giving the government that 0% interest loan. Make those dollars work for you, and this will help keep your wallet heavy ($250/mth on average heavier!) and your heart light.
Question: So, will you wait for tax time next year to roll around and aim for that giant refund? The one you will spend without a plan in place. Or, will you plan ahead with an accountant to increase your monthly traction and make the expenses of daily life easier? Let me know in the comments. Need help?! No problem. Reach out to me anytime or book a free consultation.