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While not having to blast open the Anger Central piggy bank, I wasn\u2019t surprised that I wasn\u2019t getting a refund. Why? Because I have set my withholding to the minimum I can, that\u2019s why. I\u2019ve been watching the stories about people who are suddenly finding out that they aren\u2019t getting a refund, or are getting one that is smaller than they anticipated. The them I say, \u201cWhat are you, morons?\u201d<\/p>\n
There is a reason why I prefer to owe money. When you get a refund, it means that you overpaid your taxes, and that basically, you have given the United States Government a nice interest free loan. Yes, that is what I said. You have generously supplied the treasury with a loan and they are repaying it with no interest to you.<\/p>\n In my case, and in the case of many others with half a brain, we don\u2019t really want to loan the Congress any of our money. Instead, we would rather put it into interest bearing accounts and actually increase our assets. This means we will set the withholding to zero on the W2\u2019s we fill out.<\/p>\n Also, I have investments that earned dividends and those are also taxable. What hurts there is my reinvestment system. I use something called a \u201cDRIP\u201d through my broker. This is short for Dividend Reinvestment Program. When the dividend is posted to my account, more shares are bought of the stock that just paid me a dividend. This means a bigger dividend the next cycle. Wash, rinse, repeat.<\/p>\n The down side is that the cash isn\u2019t available to handle the taxes I know I will be paying. I have to pull that from my savings. Still, the dividends earn me far more then I would get with just a bank account and 100% more then if I handed the money to Uncle Sam in the hopes of a refund a year later. Also, the new tax law is fully kicking in now. I\u2019ve already seen a nice cut in my taxes and that money is going into my stock portfolio and my IRA accounts.<\/p>\n Speaking of the new tax laws, many people forgot that besides cutting rates, the new law also cut a lot of deductions, and increased the standard deduction. One of the places that people are getting hit is the now missing deductions for state income taxes and property taxes above a certain level. In the past, these deductions have allowed high tax states to hide what they are stealing from people. Now people are seeing just how badly they\u2019re getting screwed by their state and local governments.<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n