
One of the joys of life is to get a tax refund! It makes one feel like a superhero, that we somehow beat the IRS and Uncle Sam. It is an unexpected infusion of cash and there always is an expense that it can be spent on. However, not to rain on your parade, what is a tax refund? It is an interest free loan that you extended to the government for up to a year. They kept your money for that time and then gave it back to you when you filed your taxes.
It wasn’t a big loss when short term rates were close to zero. But in today’s environment when short term rates are close to 5%, do you want to park your money somewhere that gives you no return? I know that it is counterintuitive to the joy that you get from getting a tax refund, but it might be even nicer to keep more of what you make throughout the year. Great time to review your Form W-4 and adjust your withholdings.