It is really an active time of the season for a lot of American consumers, as income tax day comes closer.
No, most individuals are not very fired up about filing their tax forms, most people get a refund each year, and this year that reimbursement works out to a bit more than two thousand dollars.
That cash is generally immediately spent on a new TV or a family vacation or as a deposit on a brand new car.
Most Americans seem to look at their tax refund as some kind of prize, rather than money that ought to be put to work to boost their financial health.
Tax refunds are rarely spent sensibly, which is a pity.
The average American family carries almost $10,000 in charge card debt, and that two grand or so might help a lot towards paying back that unsecured debt.
Of course, few people will look at it that way, as this kind of big sum of cash just appears to be better suited towards a big purchase.
But what if that $2000 was in your pocket the whole time? Could you do something wiser with it? The tax refund that most individuals receive each year is simply that; a refund.
This means that the taxpayer paid out more money in income taxes than he or she owed, and for the typical taxpayer, that means approximately $170 per month.
That cash has basically been lent to the federal government, without interest, for 12 months.
With many people heavily in financial trouble, who can truly afford to lend the government money at no interest for a whole year? Could not that cash be put to better use all year long? Of course it can.
That money may be used every month to reduce credit card debt.
If people would just adjust their tax withholding by filing a new form W-4 with their employers, the amount of taxes removed from their paychecks would be decreased accordingly.
That means, typically, an extra $170 per month in the take-home pay.
And that money would be accessible to to remit additional payments on those monthly charge card bills.
It is a far less costly and easier way to lower debt than to go through a complicated and expensive debt consolidation plan.
Sure, the federal government has huge deficits and requires money, as well.
But you must review your own monetary needs first.
That means taking on that credit debt.
Lowering your withholding is an excellent first step in that direction.
The W-4 form allows tax write offs for each dependent child while offering allowances for workers who are married.
Every time that status changes, workers should reexamine their tax payments and fill out a new form to account for the changes.
If you have no idea how much should be withheld from your paycheck, you may go to the Website of the IRS and try their tax-withholding calculator.
There is no reason to give a loan interest-free cash to the Internal Revenue Service when you might be using that cash to repay your bills that are accumulating interest at twenty percent per year.
The money you earn with each paycheck is yours to use as you desire as is the money you get from your tax refund.
Still, for your long term economic health you should use your money wisely.