a case between instant gratification
Los Angeles-Long Beach, CA (PRWEB) May 07, 2015
National Debt Relief recently shared in an article published May 2, 2015 how consumers can choose between a big paycheck every month or a big tax refund at the end of the year. The article titled “What’s Better A Bigger Paycheck Or A Big Tax Refund?” shares some of the pros and cons of choosing one over the other to help guide consumers on what is sound financial decision.
The article starts off by pointing out that April 15 is already done and over with signalling the start of a new tax season. The reason why people need to choose between a big pay or a big tax refund because consumer can not have both. It is either they file a big tax deduction to cover over and above their tax requirements and be left with a smaller monthly pay or file for minimum tax payments and get a bigger pay every month.
The choice seems to be a case between instant gratification or if consumers can wait it off and enjoy one big pleasant surprise at the end of tax season. It has a lot of similarities with that social experiment where a marshmallow was placed in a plate in front of kids. They were told that they can eat it but if they can wait a few more minutes, they will get double.
But choosing between a huge tax refund check versus a bigger pay is not a very simple option to process. The article highlights the fact that a tax refund check can be likened to a consumer giving the federal government an interest free loan. The government and even the private sector would never do that so why would consumers agree to it?
On the other hand, there are some consumers who are afraid that they might underpay their taxes and be hit with penalties and fees. They would rather pay a bigger amount each month just to be sure knowing that whatever surplus they paid out will be refunded back to them in a year’s time. It is like a forced savings on their part.
The problem is that this “savings” does not come with any interest and if that amount would have been placed in a high performing investment instrument, it might yield more than the consumers just getting the exact amount from their overpayment. If they overpaid $2,000, they get $2,000 back but if that amount was invested, it would be $2,000 plus earning.
To read the full article, click this link: [http://www.nationaldebtrelief.com/whats-better-a-bigger-paycheck-or-a-big-tax-refund/