A Tax Refund Isn't a Good Thing

Tax Day is coming up this week.  If you haven't already filed, then get it done.

Many people get excited about the prospect of a refund on their taxes.  If you are a competent saver, though, you shouldn't be.  Getting a refund means that you overpaid taxes during the past year.  The IRS has been happily taking your money, earning investment income on it, and will give it back to you after you file.

Instead, you should arrange your W-4 with your employer to withhold less of your salary for taxes.  The goal is to owe a little to the IRS when you file your taxes.  That way, you keep your money as long as possible, and you earn interest on it instead of them.  Don't lower your withholdings too much, though, or the IRS will fine you.

This method also means you won't be waiting around wondering if your tax paperwork got to the IRS successfully.  You'll know when they cash your check.