Friday, January 27, 2012

Fester's financial advice: Don't count on a tax return

One quick piece of financial advice. Don't plan on getting a tax refund from the government until after you have filled out your taxes. The tax code constantly changes, your life situation constantly changes, deductions come and go, rates change from year to year, a tax refund is simply not something you should count on getting each year.

With tax season upon us I have heard more than one person say something along the lines of “I hope to get my W-2's soon since, I cannot wait to get my tax return”. I believe this is folly, counting on a tax return before you have actually done your taxes is not a good idea. A tax return should be treated in the same way you might treat a win at the casino, it is nice to get the extra money, but nothing you should plan on getting. Even if you have gotten a return every year for the last 10, don't count on one for this year. You are likely to have forgotten some fact that will change your tax liability. It can happen to anyone, a friend of mine only now realized that he owes taxes on his unemployment income which didn't have taxes automatically deducted and he has gone from being confident in getting a return, to possibly having to write a check to the government.

1 comment:

Macrobius said...

Then there was the time not long ago when the California government was not issuing refunds - it was sending IOUs!