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Most finance bloggers will tell you that getting a tax refund is a bad thing. Why give the government a free loan? These finance bloggers make an excellent point. If you really think about it, the money you are receiving from your refund really is money that the government “borrowed” from you throughout the year, without paying you interest! Maybe that’s one of the reasons why they insist on making taxes so complicated. But I digress. Still, in spite of logic telling me it’s a bad idea, I love getting a tax refund. Here’s why:
1. It’s usually pretty hefty
Because I own a home, I have access to some pretty awesome tax deductions. I can deduct the interest I pay on my mortgage and the taxes I pay on my property. Whoo-hoo! These two deductions usually push my refund up into the 2-3 grand territory, which is pretty awesome. And last year (when it was still tax deductible, did the new tax bill take that away?) I moved 2000 miles for a job! So I’m thinking I’ll get a pretty nice return this year.
2. I feel good about getting a large sum
The thing about getting a pretty nice return is that it’s actually pretty nice. It is freaking awesome to get a hefty lump sum deposited into your bank. I know this isn’t logical or practical in any way, but sometimes we can let our emotions win. Getting a random check for 2-3 thousand dollars feels pretty dang good. It definitely feels better than getting that same 2-3 grand over the course of an entire year!
3. It’s easier to budget
Not only does getting a large sum feel better, but (for me anyway) it’s so much easier to use a large sum like this for investing and special treats than it is to use your regular paycheck. I’m good enough at budgeting, but I’m not spectacular. That 2000 spread out over 26 paychecks is only 76 bucks a paycheck. Now you super frugal awesome money managers may be able to easily calculate that and squirrel it away, but 76 bucks isn’t much to me. It would be gone. I’d use some of it to reload my Starbucks card, or some of it to order a pizza (if you can’t tell, I’m very food motivated). I definitely wouldn’t save up $500 from that to buy new clothes (yes, I usually go clothing shopping once a year, and use my tax refund to do it). I may or may not put some of it into an investment or savings account, but why leave that to chance? It’s way easier for me to manage that extra money when I get it in a lump sum.
4. It helps me quickly achieve goals
This is another psychological rather than logical point but hey, we are all human, and we all have weird emotional things. It feels quicker to take $1000 from my tax refund and put it towards my vacation fund than to put $50 per paycheck in my vacation fund. I know, I could save for the entire year and by tax time I’d have the exact same amount, but it just doesn’t feel the same.
I think it’s important that we give ourselves psychological wins sometimes. Everything can’t always be about logic. I find that I actually do better with my overall investment strategy if I let myself have some of these.
5. I’d rather get a refund than owe money
Let’s be honest, the US tax system is complicated at best. There are so many different rules and income levels and percentages that it can be confusing to keep track. I wouldn’t want to calculate things incorrectly and then end up owing the government a huge amount (or anything at all, for that matter). I do know that with my income level and my typical deductions, I usually get a pretty decent refund. So why mess with that and risk owing money?
6. I don’t want to do the maths (or research)
Not only do I not know how to calculate things out so that I’d be at a big fat 0 come tax season, but I don’t care to find out. I don’t want to do the math here. I don’t want to calculate how much money I should send to the tax man each paycheck, and I don’t want to figure out how much of my new, bigger paycheck is due to my tax changes. And, tying into the reason above, the system is so freaking complicated that I don’t think I’d be able to figure it out even if I had the desire! Or maybe I don’t have the desire because of how complicated it is. Either way though, learning the ins and outs of the tax code and figuring out exact numbers isn’t something I’m interested in.
That’s why I love getting a tax refund
So there you have it. Six reasons why I, a logical personal finance/lifestyle blogger, actually prefer getting a tax refund. Do you like to get a tax refund or would you rather not give the government an interest free loan? I want to know if I’m a huge outlier in the personal finance community! Let me know in the comments!