Tax Minute


The IRS refunded in excess of $359 billion in 2022. Did you just receive a tax refund from the Internal Revenue Service that was thousands of dollars? Good for you, but that was one of the dumbest financial moves you could have made. Here's why. You worked throughout the year and had money withheld from each paycheck that your employer remitted to the Internal Revenue Service on your behalf. Some of this money was remitted in January 2022, therefore the government had this money for in excess of one year. When you filed your tax return they gave you your money back that you had given to them to cover your tax bill. Although the IRS had some of this money for over or year, you got no interest when the government gave it back to you. You would be much better off getting the money in every paycheck and being disciplined enough to save that money in an interest-bearing savings account or to use that money to pay off high interest debt rather than giving the government an interest free loan for over a year. If you get a refund that is in excess of $1,000 from the Internal Revenue Service or $400 from the Massachusetts Department of Revenue you should look into changing your withholdings so you can put your money to work for you rather than getting no return on your investment through a large tax refund.

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