Bob O'Brien
Head Instructor
bobrien@mywealth.com
It still amazes me, how many people think that a big tax refund is a good thing. Hey don’t get me wrong! Who doesn’t love receiving money, but when it’s your own money, LESS interest… what’s there to be excited about?
I have to be honest though, over the last 10 years or so, it has not been that big of a deal since we have been in a low inflationary environment. Big deal, you would have been able to get 1% on your money in a bank account, if it was not with the IRS, but this will probably not be the case in the near future.
If there is one thing that you should know about the current economic crisis is that eventually, it going to create some really serious inflation. Things are going to be going up in price pretty rapidly and then leaving your money with the IRS for a year does not make any sense at all. You want to be certain that you are getting interest on that money.
If you talk to some people that lived through the late seventies when there was high inflation and had money in the bank, they will tell you that in those days you got 10% - 13% in a savings account. We may see rates like this again and whether we do or not, you don’t want to leave a cent more than you have to with the IRS. It’s a really good idea to make certain that you are taking withholdings properly now and generally deferring paying taxes as long as you can.
In general, remember that your tax preparer and even a tax computer program that you use are not going to tell you that you are over withholding… because as long as you are getting a big refund they feel you will keep coming back to them. After all, it’s not their money. Do you have a tax question?
Here are some other tips for tax season to keep in mind.
1. Do your best to get your taxes done as early as possible. You may get an early-bird special and you will also get better service then you will get in the last week of March or early April.
2. Ask questions. Make certain that you ask you preparers questions and don’t let them intimidate you. They are not as smart as they would have you believe.
3. Be careful of investment advice from your CPA or tax preparer. (Also be careful of tax advice from an investment advisor). You need to be the mediator. CPA’s love investments with tax advantages, because they understand them best.. Ex. Real Estate, Tax Free-bonds.
4. Review your return and try to make sense of it all. It’s just basic math, and understanding your taxes better is key to understanding politics and the economy.
I hope these tips help you and you turn the tax season into a learning experience every year because it is one of the biggest expenses of your life. The better you understand them, the more you will save.
Please share your comments below and check out our courses!
Sincerely,
Bob O’Brien
Senior Instructor
www.mywealth.com
