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The Best Part of Paying Taxes ISN’T Getting the Refund

“But one must take pride in paying up every April 15. Look at it this way: If you don’t spend your dollars on the IRS, you’d probably just squander it on foolish things, like food, rent.”
–Cindy Adams

I recently was driving and listening to the radio, when an ad came on which almost made me run off the road. It was a Visa ad, and the pitch was that the best part of paying taxes was getting a tax refund, and to get, and spend the refund faster, it’d be best to put it on a prepaid Visa card. I don’t know at what body temperature blood starts boiling, but I must have been close, because it was certainly simmering.

To me, the best part of paying taxes – sort of like asking which part of the body is least painful to receive a series of pinpricks – is legally avoiding paying for them in the first place! That’s why you should be smart about tax strategies in the first place! Filling out your 1040 or using a software program and hoping at the end of the exercise, you wind up with some sort of huge refund is, to me, an act of throwing your hands up in the air and leaving your financial fortunes to the IRS. Good luck. Sometimes, you’ll get lucky, and sometimes, you won’t.

Worse yet is planning on spending the refund willy nilly on whatever comes to mind at the time the check arrives or the IRS deposits your money in the bank. If you have no plan with your money, then Monkey Brain is happy to come up with a plan for your money. It’ll be like the wild bender the night you turned 21. It’ll be a heck of a lot of fun for about 6 hours, but it’ll leave you with a wicked hangover.

However, the worst possible sin is the one that I see at a ton of these tax preparation places.

Wait. Let me stop the story here. I have to ask a question. Someone please enlighten me in the comments at the bottom of this article.

Why do people think that someone dressed like the Statue of Liberty spinning some sign in front of the lowest possible cheap rent strip mall hole in the wall is going to get them some massive tax refund that a trained CPA couldn’t find?

OK. Rant over. Carry on.

With terms like Rapid Refund or Refund Anticipation Loan (RAL), these tax refund cashing services make it seem like a convenience to get your refund earlier than the IRS will give it to you. Instead, they’re fleecing you. It’s the same with a Visa prepaid card deposit service that a lot of payday loan wannabes are offering. They’ll charge you an origination fee, then servicing fees, and monthly fees, and pretty soon, your refund is dust.

If you’re counting on your refund as part of your budget, then you have some serious budgeting problems. You should either be budgeting in the first place, or you should be looking for extra sources of income.

Is getting a tax refund the worst of all possible financial sins? No. In the context of this ad, the two transgressions were having the mindset of depending on a refund for your well-being and then compounding the problem by paying a bunch of money to get it just a little early. For 90% of the people who receive a refund, the waiting time is less than three weeks.

No, I am not one of those financial planners who is going to scream ZOMG YOU GOT A REFUND. YOU GAVE THE GOVERNMENT AN INTEREST FREE LOAN! YOU ARE AN IDIOT! Let someone else froth at the mouth about that topic. I’d rather you pay less in taxes in the first place.

Let’s see how much money is being lost by that “free loan” to the government that causes such a lather amongst the financial planning community.

First, the average tax refund in 2010 was approximately $3,000. So, let’s say that you managed to nail your average tax return amount spot on and not send that $3,000 to the government. Assuming a 1% annual interest rate on your money which is compounded at the end of the month and that you manage to deposit that $250 ($3,000 divided equally by 12 months) at the beginning of the month, you’re talking about getting a grand total of…

Drum roll please…

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Jason Hull is a Fort Worth fee only, hourly financial planner who serves clients in Fort Worth, TX and Dallas, TX as well as serving clients nationwide.

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Hull Financial Planning is a Fort Worth, fee-only hourly financial advisor. The cities we serve in the Dallas-Fort Worth area include: 

Tarrant County: 
Arlington, Azle, Bedford, Benbrook, Blue Mound, Burleson, Colleyville, Crowley, Dalworthington Gardens, Edgecliff Village, Euless, Everman, Flower Mound, Forest Hill, Fort Worth, Grapevine, Grand Prairie, Haltom City, Haslet, Hurst, Keller, Kennedale, Lake Worth, Lakeside, Mansfield, Newark, North Richland Hills, Pantego, Pelican Bay, Rendon, Richland Hills, River Oaks, Saginaw, Sansom Park, Southlake, Trophy Club, Watauga, Westlake, Westover Hills, Westworth Village, and, White Settlement 

Dallas County: 
Addison, Balch Springs, Cedar Hill, Carrollton, Cockrell Hill, Combine, Coppell, Dallas, DeSoto, Duncanville, Farmers Branch, Ferris, Garland, Glenn Heights, Grand Prairie, Grapevine, Highland Park, Hutchins, Irving, Lancaster, Lewisville, Mesquite, Ovilla, Richardson, Rowlett, Sachse, Sand Branch, Seagoville, Sunnyvale, University Park, Wilmer, and, Wylie 

We also serve clients nationwide and can leverage technology to maintain our client contact and communication.


Hull Financial Planning, 2939 Crockett St. #315, Fort Worth TX 76107, (817)476-0584

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Comment   |  6 years, 10 months ago from Fort Worth, TX