A fat tax refund is just another way to say you paid too much taxes!

Scott Kahan |

A fat tax refund is just another way to say you paid too much taxes! Did you just get a fat tax refund or a big bill? Either way it could be a sign of poor financial planning says Chappaqua’s Scott Kahan CFP®. We asked him to give us his best tips on tax planning and financial planning. Here’s what he sent us…

A fat tax refund is just another way to say you paid too much taxes!

With the April 15 deadline to file tax returns upon us some filers will have to dig into their pockets to pay Uncle Sam. Others, who will be getting a tax return will celebrate their good fortune. But a fat tax refund can be a sign of poor financial planning and may mean that you have missed some opportunities to fully fund your financial goals.

Getting a big refund really means you paid too much taxes.  Some people count on these refunds to pay for a vacation or to pay down debt. But when people over-withhold they are giving the government an interest free loan. Wouldn’t you be better off getting the money each week and putting it into a vacation savings account? Even with low interest rates, at least you’re getting something.

For many people a tax liability or a refund, can come as a surprise. This was an unusual year due to the changes in the new tax law, that included a doubling of the standard deduction, elimination of personal deductions, increased child tax credits, and the cap on SALT taxes. Anyone surprised by their tax returns in 2018 needs to sit down and do an evaluation to avoid it happening again in 2019.

 

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