What better way to spend Superbowl Sunday than doing my taxes? Well that is what I did on Superbowl with fantasy football Sunday. I am not much of a fan of fantasy football and I am not much of a gamer interested. It seems as those 2 go hand in hand on Superbowl Sunday. My wife and I usually get a big tax return due to my withholding philosophy. I personally like the psychology of receiving a big pay back from Uncle Sam.
This year we are receiving close to $3,000 back from the IRS and the state. That is a lot of money that had I been a better money manager throughout the year I could have put it to good use.
Say I had opened up an investment account I could have put my money in the stock market. Had I taken that $3,000 and invested it for a year rather than letting the IRS hold onto it and collect interest, I could have earned money on it myself. Obviously since the money would be deposited biweekly I would have had to do a money market account or some other investment vehicle that allowed me to make biweekly distributions. While the amount over the year will be nominal any money is better than no money.
We could have taken the additional money in the paycheck and put the $115 per check under the mattress and taken out the $3,000. With my preferred saving method of letting the IRS hold onto it, it is forced; you cannot access the money in an emergency, so you learn to live within your means.
There is just something about receiving a large check in the middle of the winter that brings a smile to my face. We usually use this money to pay off some bills or credit cards. We have lived without this money all year in the form of reduced paychecks so it feels like a nice little bonus.
There are many money calculators out there that you can put in various assumptions and come up with an estimated deduction amount that you can use on your W-4 to attempt to accurately predict your coming year tax liability. Here is one on Kiplinger Personal Finance, I regularly check out their website. One of my favorite websites is Yahoo Finance, they provide a wealth of information on there and it is coupled with great search capabilities for Yahoo. Here are some great articles to take a look at before you file your taxes.
How do you handle your taxes? Do you like that big refund or would you rather owe Uncle Sam a small amount? There is no right or wrong, it is a matter of personal preference.