If you are one of the lucky few, you will be able to secure your tax refund from the government. Basically, it is the excess amount of the difference between what you actually paid/remitted to the government and what you should have paid based on the computations of the Internal Revenue Service, the former being larger than the latter, obviously.
Now, once your tax refund check is in your hands, you will want to start planning on the ways you can use it for yourself. You can use it to pay debts that have been outstanding for so long because you chose to pay your taxes instead. You can add it to your nest egg for retirement. You can place it in emergency funds. You can invest it. You can add it to your vacation budget.
Indeed, there are many things that you can do with your tax refund. The trick is in making sure that you can actually make good use of it. Keep in mind that said money is actually yours, not the federal government’s funds, simply because you earned it but paid taxes on it and then it was subsequently returned to your account. You can call it true love, if you like.
However, all these things that you can do with a tax refund are with the assumption that, indeed, you have the check with your name on it in your hands. This is possible if and when you have actually no tax liability with the government, instead the tables are turned – the government owes you money.
In turn, you should be able to project your taxes so that by the time the filing of taxes are made, you have the money to pay for them. This way, you can estimate what you will be paying and then increase your chances of getting a refund.
And here is where the unfair relationship between taxpayer and tax collector begins, in a manner if speaking. On one hand, you have to pay your taxes on time or else pay the interests, penalties and surcharges applicable to your late tax payments. As any delinquent taxpayer knows, the Internal Revenue Service is not exactly known for its mercy.
On the other hand, when you pay excess taxes on your incomes, the government will hold your money for at least a year before giving you the tax refund. Take note that there are no interests forthcoming with your money as used by government. Now, how unfair can that be?
Tax Calculator to the Rescue
Fortunately, there are online tax calculators that can help in lessening the instances of such an unfair relationship. These calculators allow anybody to estimate the tax to be paid come filing time, thus, avoiding the loaning of money to the government.
It also allows for efficient setting aside of weekly tax contribution into a savings plan. This way, you get to reap the interest on the savings account instead of the government suing it at no extra benefit to you.