Today Is Tax Day
In case you’ve been in a cave, today is the last day to file your tax return. Unfortunately for me this is the first year that I have owed taxes, but it was a planned decision.
Last year my wife and I received a pretty hefty refund, so I decided to increase my withholding to 2. Most of my friends advise claiming zero, which causes the most taxes to be taken out, but pretty much guarantees you will receive a refund at the end of the year. Doing this, however, is like giving the government a free loan through the loan since you don’t earn interest on the money they keep. Knowing that we were going to owe taxes this year, I saved the extra money every paycheck so that it would be available when the bill came due. In the meantime that money was sitting in an account earning interest.
It wasn’t much, but we earned about $20 in interest on the money we had saved. When we finished our taxes I was a little sad to move the money out of our savings account, but I am still happy that we made the decision we did.
There is one catch to doing this, and one I was not aware of until working on our taxes this year. If you underpay your taxes too much, you can get hit with a penalty for underpayment. Funny isn’t it? If you give the government too much during the year they don’t pay you for holding your money. But if you try to keep the money you worked for they hit you with a penalty.
Overall tax time has made me bitter towards the way our government spends money. I don’t mind paying for education and health care (as long as it’s done right). But I hate that our government gives money to poorly run companies and spends money on wars in other countries. But of course that’s a topic for another post.
Just curious about others, did you owe this year or did you get a refund? Leave a comment!
