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Expert: don’t give the government a tax-free loan

A lot of people look forward to a refund during tax season, but is planning for that check the best money move?
Published: Feb. 22, 2022 at 1:28 PM EST
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InvestigateTV - A lot of people look forward to a refund during tax season, but is planning for that check the best money move?

Many actually look forward to filing are taxes this time of year in hopes of a big refund check, but Michael Joyce with the financial firm Agili said while that refund could be considered a sort of “forced savings,” it’s really just the government giving you back money you earned with no interest.

“But you could have been doing other things with those funds. In essence, you’ve given the government a big zero percent loan for a period of time when you could have been earning money on that in a savings account,” Joyce said.

You could have been investing that money if you withhold just enough where you don’t get a large refund at the end of the year, that means you are getting more money back in each paycheck.

Joyce said the key is to withholding for taxes is to get as close as you can to what your tax liability is going to be. He said it’s not good to withhold too little or too much.