Maybe you shouldn’t be. A tax refund is a reimbursement to taxpayers who have overpaid their taxes — often due to having employers withhold too much from paychecks.
The U.S. Treasury estimates that nearly 3 quarters of taxpayers are over-withheld, resulting in tax refunds. When you get a tax refund the government is just giving you back the money you paid. Think of it as giving the government an interest-free loan.
If you don’t want to be part of crowd lending the government money interest-free, you can adjust your withholding by filing a new W4 with your employer. If you are one of the taxpayers making an estimated tax payment quarterly, you can adjust those payments so they better reflect for income and projected tax bill.
Couldn’t you use a little extra money in your pocket throughout the year?
There is nothing wrong with owing a small amount when tax time rolls around. But be sure that your payments are the lesser of 100% of your prior year’s taxes or 90% of the current year’s taxes to avoid any underpayment penalties.
Need help figuring out where you stand at any time during the year? Just call your tax advisor.
If you’re an RMS Accounting client there is no charge for any tax planning support you need throughout the year, so give us a call at 954-563-1269.