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10 Reasons to NOT Receive a Tax Refund - Valley News Live - KVLY/KXJB - Fargo/Grand Forks

10 Reasons to NOT Receive a Tax Refund

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A lot of us look forward to our annual tax refund, but the financial experts at the Village Family Service Center have 10 reasons you should not intentionally plan on getting all that money back every tax season.

Financial professionals at The Village Family Service Center encourage taxpayers to consider the following 10 reasons to discontinue the practice of receiving a federal income tax refund:

1.      Overpaying any financial obligation rarely makes sense.  No one wants to end up owing more taxes than they are prepared to pay, but receiving an excessive refund is not the proper solution.

2.      Intentionally choosing to loan money without the benefit of earning interest isn't a smart use of money.

3.      If saving is the objective, there are better options to meet that goal.

4.      Not having ready access to one's own money could put a person in financial jeopardy if an unplanned expense or emergency occurred.

5.      Having less money throughout the year could add the burden of financial stress.

6.      A lower paycheck could result in charging items that otherwise would have been paid for with cash, thus potentially creating debt.

7.      Less money available for debt repayment could increase likelihood of late payments, resulting in a negative impact on the credit report and score.

8. A smaller paycheck diminishes the opportunity to save, pay bills, donate or invest.

9.      In spite of good intentions, a once-per-year refund often results in a once-per-year splurge.

10.      The solution is an easy fix.

Advice from the experts:

To calculate the proper number of withholding allowances, go to www.IRS.gov and type the words "withholding calculator" into the search bar.  After determining the appropriate number of allowances, complete a new W-4 if necessary.  Workers are allowed to submit an updated W-4 to their employer at any time during the year.

If the adjusted allowances result in a higher paycheck, make a conscious decision regarding how to best allocate the extra money.  Cunningham notes that whether the objective is to save money, catch up on past-due bill payments, donate to charity or invest, without a solid plan to execute against, the money will likely not serve its intended purpose.

For answers and solutions to everyday financial concerns, you can contact The Village Family Service Center, an NFCC member agency, at 1-800-450-4019 orwww.HelpWithMoney.org

 

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