Hunzinger Accounting & Financial Solutions

Tax refund = Interest-free loan

I was speaking to a friend the other day that was telling me how great her accountant was. I told her how happy I was to hear that and that I wouldn’t waste my time pitching her on changing accountants. I truly believe that “if it isn’t broke then don’t fix it.” But…

She went on to tell me that last year she received a $10,000 tax refund. You might be thinking “Wow that’s great!” But it’s not. I explained to her that by getting that huge refund she had merely given Uncle Sam a 1-year interest-free loan. A good accountant can help you to determine how much to withhold without owing a fortune at the end of the year and at the same time making your money work for you instead of loaning it to Uncle Sam. If you’re worried that you’re going to just spend the money and you’re thinking of your tax withholdings as a savings account, instead set up an account just for these monies. It’s a great way to save money for a rainy day or to use for focused spending such as paying down high-interest credit cards. Either way, you’re putting yourself in a better financial position and making the most of your money.


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