August 6, 2020

Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.

One of the main reasons why you don’t want to receive a refund is because it means you’ve essentially loaned the government money that you will never receive interest on. This money could have potentially been applied to other debt that you’ve been carrying around such as student loan or credit card debt instead of loaning it out to the government to use. Rather than overpaying in taxes, here is where you could put your money instead:

  1. Open a retirement account. The average taxpayer will receive a tax refund upwards of $3,000. Instead of overpaying in taxes which could cause you to miss out on huge savings opportunities, you could invest it in a retirement fund or increase the amount you are contributing to your current plan. By the time you are able to retire, you could have a large lump sum of cash waiting for you.
  1. Start an emergency fund. If something unexpected ever happens that may impact your financial wellbeing, you may want to consider placing your money in an emergency account. The money that you place into this account doesn’t just accrue overnight, it requires that you set funds aside little by little. The refund that you receive after filing your taxes could be preventing you from placing more money into a back-up account and you may need to consider adjusting your withholding or estimated tax payments you are making to the IRS.
  1. Look into paying down your debt. If you receive a tax refund of about $3,000, that means that you are missing out on pocketing an extra $250 a month. This money could be used to pay down any loans or negative balances you have to ensure that you remain in good standing on all your debts. 

If you’re still unsure about how much you should be withholding from your paycheck, consider using the IRS’s withholding calculator. It will require information such as how much you pay in taxes and how much you have already withheld. This will help you make a determination on how much you should be withholding in order to get the most out of each paycheck. 

If you need tax help, contact us for a free consultation.