Quantcast
RELATED

After the holiday season comes to a close, the real adult holiday rolls around: Tax Refund Season. Tax return franchises have opened their doors, some equipped with air dancing balloons and people dressed in costumes flood the streets promoting everything from same-day refund and cash when you file, to options of filing with your last pay stub. With so many people cash-strapped from keeping up with the Joneses on Christmas and balling out for the New Year, cash on the spot seems very attractive, but before you fall into the illusion of free fast money, take a look at how much your tax refund is really costing you.

Who's Preparing Your Returns?

Giphy

If you are one of the people who are lucky enough to receive a refund, then you are most likely not concerned on how or why the refund was issued. If you are in the majority of middle class people who make too much to take advantage of many of the tax credits and end up owing the IRS, you are most likely interested in how to minimize your tax liability going forward. For the people in the second category, big chain tax return preparation companies are not much help to you.

If you fall into the first category, these preparation centers, which are primarily in lower income neighborhoods, advertise products that are not financially responsible for most taxpayers. Refund cash advances can come with fees of up to 18% taken from your refund and they are not always transparent about these costs upfront. They also rarely offer guidance on what tax-saving strategies and tips are available to you. The tax return preparation fee is not revealed until after you have completed your return with a representative and you can feel pressured to file with them since they already have done the work. More importantly, many are only open for the tax season, which is until April 15th, so that audit letter you received from the IRS in June…good luck finding your tax preparer to help you craft a response.

Can Receiving A Smaller Refund Be Better For You?

Giphy

I know you're wondering how can a smaller refund be a better option? But in some cases, it may be. First, you have to determine if your refund is due to an overpayment of taxes during the course of the year or because of tax credits/deductions that affect the amount of taxes you owe. If you are withholding more money than necessary, that is money that the government holds all year, interest-free.

Let's say you file your taxes for 2018 and discover that you withheld $1,000 more dollars than you owed, which is approximately $83 a month, and you invested that $83 each month and it earned 5% compound interest monthly. You would have $1,048 at the end of the year as opposed to the $1,000 the IRS refunded you. Of course, your refund would then be smaller but you would have more money overall. Although it can sometimes be hard to see the big picture, these amounts can add up quickly.

Why An Accountant Is A Better Solution

Giphy

Finding an accountant that is professional and whom you can trust is really the key to maximizing tax season. While the tax preparers employed at franchises are licensed, they typically do not have the same wealth of tax knowledge as a professional tax preparer or accountant. These are people who can give you specific guidance to your tax situation and if you stick with the same person for a number of years, they can be instrumental in helping you use tax planning to reach your other financial goals.

While it may be a few extra bucks up front to hire a private tax or accountant professional, knowing that you are not leaving any money on the table is worth the peace of mind.

Related Articles

6 Things To Do With Your Tax Refund – Read More

The Best Way To Budget For Taxes When You Are Self-Employed – Read More

Venus Williams Wants Us To Know Our Worth And Add Tax – Read More

Featured image by Getty Images.

 

RELATED

 
ALSO ON XONECOLE
Devale Ellis on the xoMAN Podcast | Redefining Fatherhood & Marriage

In this candid episode of the xoMAN podcast, host Kiara Walker talked with Devale Ellis, actor, social media personality, and star of Zatima, about modern masculinity, learning to be a better husband, emotional presence in marriage, fatherhood for Black men, and leading by example.

KEEP READINGShow less
cropped image of african american lovers in morning at kitchen

Something I will never tire of is finding new ways to bring new layers to intimacy. A wall you use as momentum, a bathroom sink to help you keep your balance as he worships you on his knees, a shower that is usually for cleansing but evolves into a sacred ritual of shared intimacy.

My favorite kind of sex is the kind of sex that prioritizes pleasure and connection. So, technically and thankfully, I can say most of my sex life has been quite pleasurable throughout the years. But the memorable encounters for sure take the cake. One such encounter actually took place on a kitchen counter, and with it unleashed inhibitions in ways I never anticipated while unlocking levels to top-tier sex. And that, that involved a kitchen counter.

KEEP READINGShow less
LATEST POSTS