It is the time of year when we begin to think about filing our income taxes with the government. Some of us get it done as fast as we can so that we get it over with, while others will wait until the last day and run to the post office to send in their tax statements.Â With electronic systems now, many people use tax software programs such as Intuit to complete and file their taxes online. Submitting your tax report only takes a matter of minutes and if you are getting a refund, you are finished. Just wait for that check to arrive.
But what if you owe tax, you can still file on line, however you had better follow up with either a check in the mail with the envelope postdated on the deadline or you send the money from your bank electronically. Is it better to get a refund or is it better to owe money at tax time. The answer is somewhat complicated and really depends on the individual and how you manage your money.
Should You Owe Money to the Fed”s? or Tax Refunds
The writer believes it is better to owe money. After all it is your money to start with and why should the government use it when you can. If your the type of person who has no problem coming up with the money when it comes time to file, then this approach is probably the one to take.
However if you have a problem saving or you do not like surprises, then it is probably best that you allow a larger source deduction to take place and receive a refund each year. Some people even look at this approach of paying too much as a means of savings. They like to get a refund in April of every year which they use to pay bills or go on a trip.
Besides for some people it is another way of saving money. Who doesn’t like to get a refund and some money in April or May from the government. It can be a nice little present that you can use to for special activities or even saving for retirement.Â Here is a summary of what the options are and the benefits of each scenario:
Receive a tax Refund
- Government has access to your money for up to a year
- Nice surprise
- Pay off bills when you get it
- Another way of saving money
Taxes Owing at Tax Time
- Did you save enough to pay your taxes or will it be a hardship
- You had access to the money
- If you have loans, then you may pay less interest
- Government may assess a penalty if your late filing
- Government may tell you to pay more during the year
These are just a few of the issues to consider when considering a Tax RefundsÂ and whether you paid too much.Â The main thing that all of us need to focus on is to complete our tax forms and get them filed on time. Oh yes, if we owe money pay it on time as well. It is only the end of Feb at time of writing and we have almost two months to get this done, so don’t procrastinate, do your tax forms and file on time.
Also if you end up having to pay a lot at tax time, the government may send you a notice reminding you to pay more during the year and reduce what you owe at the end of the year. While this is not the end of the world, it is a reminder that you need to pay your taxes in regular monthly or biweekly installments.
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