When too much of your income is withheld for federal taxes, you’re giving away an interest-free loan to the government without receiving anything extra in return.
El Segundo, CA (PRWEB) March 01, 2013
Millions of taxpayers are anxiously awaiting their big tax refund from the federal government. In fact, an NPR article entitled "Tax Day Isn't Bad If You're Getting A Refund" reports 80 percent of the 143 million federal tax returns filed in the previous year qualified for a refund. Unfortunately, GoBankingRates finds that these refunds aren't as beneficial to taxpayers' finances as they may believe.
What appears to be a gift from Uncle Sam is really a loan to the U.S. government paid back to its lender interest-free. GoBankingRates editor and savings expert, Jennifer Calonia, explains how taxpayers can keep more of their paycheck year-round. With fewer taxes taken out each pay period, there's more freedom to spend, invest, or add to a high interest savings account, rather than overpay income taxes all year and wait for a tax refund in April.
Calonia advises taxpayers, "When too much of your income is withheld for federal taxes, you’re giving away an interest-free loan to the government without receiving anything extra in return. So when a hefty tax refund is sent your way after you’ve filed your tax return, it’s a sign you’ve been duped."
As a solution for taxpayers, Ms. Calonia details how individuals can make adjustments that result in fewer taxes taken out of paychecks, freeing up monthly income instead of loaning it to the U.S. government.
For questions about this report or to schedule an interview with a GoBankingRates editor, please use the contact information below.
GoBankingRates.com is a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. GoBankingRates collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information.
Jaime Catmull, Director of Public Relations
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Source: NPR, Tax Day Isn't Bad If You're Getting A Refund, April 17, 2012.