On behalf of the government I’d like to thank you for your generous taxes.
Thank you for paying too much in taxes every paycheck. We love the interest free loan! We’re trillions in debt and every bit helps. When we borrow from other countries by selling Treasuries we have to offer them interest for the loan. Can you imagine what the interest on trillions in loans comes out to?!? But by not adjusting your W-4’s you help to keep the United States afloat, if only a little bit.
Look, I know we’re in a recession and times are tough.
It’s scary out there! Unemployment is hovering around 10%. We would hate to have to cut more government jobs or programs so we all love that you extend a free loan to us. We understand you could use that money every paycheck. Even an extra $20 can help with groceries. Or it could even be used to build up an emergency fund, especially in these trying times. But you choose to give the money to us instead where we can do what we want with it then give it back to you sometime next year in one lump sum.
Hey, we love that lump sum.
Know why? Most of you will go out and spend it in one big bang. Maybe you’ll get that vacation or upgrade your furniture? Perhaps you’ll be paying off credit card charges from the holidays (oh, thanks from the credit card companies for that one). We love it because you’re helping to prop up the economy with your spending! Seriously! Don’t go adjusting your W-4. We have a lot of things to take care of here and we can use the extra dough.
In all seriousness though, why do so many people covet that big tax refund?
Yes, the extra money feels good to get but you could be doing so much with it over the course of the year instead of in one large amount. When I’ve tried to mention to some people that they could have more money in their paycheck they automatically tune me out and insist on the big refund.
What really gets me is how many people NEED that large refund.
You depend on it to get by. For some it will make or break your finances. This is evidence on so many levels that you need to get a handle on your money.
How many times have you looked at your paycheck stub and cursed the taxes that were taken out?
I know I have. It’s shocking to see how much more you could have been making without taxes. So why add to that?!?
The IRS has information on calculating what you should withhold on your W-4 form and it continues to their withholding calculator.
You should be receiving your W-2 (what you made at work) and your 1099 (what you made on investments and such) forms soon. Take the information and use it to complete the withholding calculator to give you an idea of what should be withheld. Use the results to complete a new W-4 form so you can pay the proper amount of taxes rather than overpay. When in doubt ask a tax professional.
Stop giving the government a free loan. It’s your money; you should have it in your paycheck!