N'DIGO - MoneySmart Guy Matthew Sapaula

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Looking Forward to Getting a Large Tax Refund?

Matt Sapaula

I am a proud father, financial strategist, TV commentator and financial talk show host of Money Smart Radio

You just may be what the Urban Dictionary calls "intaxication", meaning the euphoria at getting a tax refund, which lasts until you realize it was your money to start with.

Of course, there are those that took advantage of the Home Buyer Tax Credit and getting a $8,000 for first time home buyers or $6,500 for existing home owners...
or low to moderate income working individuals and families whom the IRS provides the Earned Income Tax Credit (2009) potentially getting $5,028, provided they have two qualifying children and make no more than $45,295 if married filing jointly.

What I'm talking about is people who jump for joy when they use their tax refund as a forced savings account, vacation money or cash to buy a new TV entertainment system...or 23" rims for their SUV.  Trust me, I'm not hatin' on anyone but this large tax refund is your own hard-earned money that you allowed your employer to take from your salary and send to the IRS in the meantime. 

Question is the IRS a better steward over your paycheck...or are you?

What do you think the IRS and the Federal government did with your overpayment of taxes?  Most likely they leveraged your generous contribution throughout the year, used it for things they needed and gave it back to you.  In other words, you may have just given Uncle Sam a 0% interest-free loan.  How patriotic!

Turn the tables around, if you owed the IRS and Uncle Sam (or Cousin Illinois) income taxes, do you think they would charge interest on you the longer it taxes you to pay them?  What about a penalty for not paying taxes on time...of course!  Are you feeling "intaxificated" yet?

To do something about getting such a large income tax refund, you may need to adjust your withholding with your employer (it's the W-4 form you fill out).    Use this Withholding Calculator on the IRS's website to give you a better idea of what you need to adjust.  By doing so, you have a chance to possibly put this cash in your pocket each month instead of waiting at the end of the tax year for a big tax refund check. 

Again, it's YOUR money to being with that you worked for!

If you'd like a free podcast download on this topic, head on over to my radio show page to listen to an interview I did with Dennis Johnson, CPA and author of Do It! Simple Actions To Eliminate Debt and Create Wealth.

What's the big benefit of doing this?  Pay down debt, build up emergency savings and save for your retirement and financial future. 

If not, Uncle Sam instead will use your money to pay off their debt, build up their emergency fund and plan for their Congressman's retirement and pension...without even sending you a thank you card.



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