Why Tax Refunds are Stupid

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Yeah, that’s right, I said it. Tax returns are STUPID !

It is amazing how many people I talk with that “can’t wait to get my tax check“. Highly educated people that are both friends and family. Why? Why are they so excited? Why are they enamored with the fact that they just gave the Federal Government an interest free loan for the last 12 months? If you get a tax return (with the exception of EIC, and some special circumstances) STOP! If anyone needs an interest free loan, it’s you! Tax Refunds are STUPID!
Figuring out how to maximize your take home pay is not a difficult thing to do. There are just a couple of simple steps to follow:


  • Identify how much money you got back from the government last year
  • Divide that amount by the number of pay periods that you receive in a year (for example, if you are paid bi-weekly, you would divide by 26)
  • That is the amount that you would have been able to increase your take home pay each pay period last year. What could you have done with that money?
  • Many employers can estimate the effect of withholding changes per pay period for you. Ask your human resources department if you have questions.

In many cases, the people that are getting these massive returns are the same ones that are telling me “I’m gonna use my tax check to finally pay off the Visa”. Can you say double whammy? You mean to tell me that you have let the Federal Government have your money interest free for a year while you paid someone else 20%+ interest (in most cases) to carry a balance on your credit card? Really? How is that a good business decision? Let’s look at the numbers.
Assume you have a $4200 balance on your Visa card and you are only making the minimum payments on it until you get your big tax check next year. Do you realize that that Visa will balloon to nearly $5000 by the time you are “ready” to pay it off?Let’s also assume that you are like many of the people that I talk to and your tax refund is going to be around $5000. We will use $5,200 to make the math simple. Do you realize that you could have an extra $200 per pay period if you are paid bi-weekly? If you were to apply that amount to the card in addition to your minimum payment that your card would be paid off before “tax time”.Why would you pay the price of interest to not let your money work for you? Not a good idea. Not a good idea at all. Make your money work for you. I hear people all the time say “I will spend it when I get it if I don’t have a tax check”. Yeah, right. Like you are really gonna pay off the Visa with your tax check? Probably not. That’s how the balance got to where it is!


We pay everything electronically. When our checks are direct deposited into our accounts, the bills are all paid immediately. As I drink my coffee, on payday, I pay the utilities, etc. I transfer the money that I need to transfer for “future purchases” into a separate account. Then, I go to the bank and withdraw the money that I use for our cash purchases such as groceries, restaurants, gasoline, clothing, etc. By me paying every single bill first, there is never a bill that “doesn’t get paid”. The line “I will spend it on something else” is garbage. What that tells me is that you are weak.
Money is an inanimate object. Why do you let it control you? Why can’t you control it? Probably the most important question is: If the Federal Government can’t even handle it’s own money, why in the world are you letting them have yours? Tax refund checks are STUPID. It’s plain and simple. Get smart in 2012. Have your money in your pocket. It’s just that simple.

You can access other articles I have written to help reduce  your debt by clicking here.


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  1. Karen Johnson says:

    I Think it’s also stupid that when you are on disability and you are the only one in the household you don’t have to pay taxes; yet, if you are fortunate and have a spouse that is still able to work and makes a certain amount of income; that you (the one on disability) has to pay taxes. Why? I feel like I’m being punished for being married. Actually thought about getting a divorce; just to save money. I honestly can say that taxes all together are stupid.

    • Christina says:

      Actually you and your spouse are married but you are permanently disabled and do not bring in any kind of income except for SSD, your spouse can file head of household and claim you as a dependent. that is what I was told at least by who does my taxes. Because I work and my spouse is the one who is on disability.

  2. Brittany G says:

    Great article!

    At 21 years old with two toddlers, I like to think I make great financial decisions for our family. And one day I hope to also be able to do the coveted ‘auto-pay’. We have to rob Peter to pay Paul around here sometimes, but I am happy to say we never have and never will have credit cards! Credit cards are horrible, and I don’t know why anyone would get one.

    While I agree with a lot of what you said about income taxes, I’m one of those people who are always saying ‘I’ll do it with income taxes’. Unfortunately too many people use their refunds for things they absolutely do not need. It’s sad seeing people walking out of Walmart with huge TVs and lots of electronics, all I see is dollar signs of how much they could have stocked their house with, or how many bills could be paid with that much money. If it’s not a NEED, we don’t use the money for it. This year ours will go to paying up 6 months of insurance on two vehicles, and completely paying off our 5 acres of land.

    All you can do is try to open up other people’s eyes to budgeting and watching their spending.

    • “Credit cards are horrible, and I don’t know why anyone would get one.”

      LOL. They’re great if you live within your means and pay them off each month. Plus the rewards/points/miles! We get 2 free roundtrip airfare to anywhere in the U.S. each year just by using our cards to pay bills, groceries, gas, etc… it’s great. The autopay features mean you never miss a payment and rack up any late fees. Did I say it’s great? LOL.

      • Brittany G says:

        Lol, Ok, maybe I should have said ‘Credit cards are horrible for the huge amount of people I know that have them that try to live above their means, and are digging themselves into horrible debt and are bad at managing money!’

        I know they’re a great way to build credit and all the benefits of the rewards, I just know too many people that never should have been allowed to get one. Too many people aren’t responsible with them.

  3. I am a tax preparer and I so so agree with you but I find I am in the minority. People do not want to owe anything and would rather get a big refund. I feel you should owe up to the amount that causes a penalty and then you have had your money all year. I guess that only works if people are willing to start a savings account with their extra take home money.

  4. Couldn’t agree more. I actually prefer to pay a small amount back each April. That way I know I’ve maximized my take home pay and the govn’t hasn’t gained any additional interest from me.

  5. Great article! Last year I managed to calculate my with-holdings to the point that I ‘owed’ the IRS $8.00!! I have no intention of letting the government use my money when I could be earning interest on it. Also, most employers offer direct deposit, and they can divide your paycheck into multiple accounts. If you want to be sure that you don’t spend the extra income on unnecessary expenditures then open a savings account for your emergency fund.

  6. Karen Johnson says:

    I personally would rather break even or even owe IRS a small amount. Our household can use every little penny throughout the year. We don’t have credit cards. We will never have credit cards.

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