A new episode of The Rachel Cruze Show is here! Watch Now
A new episode of The Rachel Cruze Show is here! Watch it here.
Menu

Real Life On A Budget

Here’s Why You Don’t Want a Tax Refund

I’m not a big fan of tax refunds. Yep, you heard that right. So what’s the problem? I’ll explain in today’s vlog.

Remember, one of the best things you can do is work with a trusted, local tax professional. Find out who we recommend in your area!

Share

  • Christy

    So I am new to all of this, and I have already gotten my refund and spent it .But my question is what do I need to do as far as how I do my W2 at work ??? I claim 1 so am I suppose to claim more ?? or none? Help Please ,

    • Valerie Tims

      I have this same problem I never understand what I am suppose to claim and what I shouldn’t.

    • Janice

      claim more on your W-4 at work to have less taken out of your check each week.

    • henningbjerre

      Claim more such that you don’t have too big of a refund, but be prepared to pay if you owe when you do your return.

    • Lisa

      The more you claim, the more you owe at the end of the year. If you claim 0, you have the max taken out and may qualify for a refund. The bigger the number on your W-4 equates to less being taken from each check. Just never claim more on a W-4 than you will on you return. You will owe big bucks.

  • Lynnette Marie Adams

    How do you know what to claim so you don’t owe? I changed deductions once and ended up owing the government and that was financial burden for me

    • deb

      Then you didn’t have enough taken out. If you don’t want to add additional claim deductions (say you had 3 changed it up to 4 & you ended up owing) either change it back or figure how much weekly you should have paid and add that on your w4 to be taken out so you dont/won’t owe at the end..

  • Scott
    • CHRISTY

      THANK U SCOTT ..

  • R.Dow

    Our problem is we don’t trust the government at all. They switch and add taxes ALL. THE. TIME. Here in MI they are practically holding a gun to our heads and telling us that if we don’t approve another tax hike that they will NOT fix the roads ( I bet, worst in the nation) and ever year the taxes we owe the state seem to change ( let alone he Fed’s and punishing those who can’t afford the federal “affordable” heath care) How do you deiced how close to “cut it”?? My biggest fear is that we would OWE money to the government & have no way to pay it ( we do not have a fully funded emergency fund & won’t be able to for some time) So then what?? Any advice?? ( we have claimed about the same amount each year for the past 7 years and each year our refund had been noticeably different…. ) Advice, anybody??

  • Rick Brown

    Yeah, I have heard it before, even ‘advised’ it because it was “script” at a place I worked….but if you get your “tax refund” back through the year it is only like $50-75$ at a time, yeah you could put that money insaving at 2% interest rate and maybe have an extra 100 at the end of the year IF YOUR LUCKY….or you could not sweat it and know that while the government is ‘using your money now’ you will get it back later and you won’t have to OWE the GOVERNMENT…..I have never heard of anyone getting rich either way….but if you get it back throughout the year that little extra doesn’t go far and if you get it all back later in a refund you could actually set up a good savings nest, or pay of some debt and manage your money in a wise way with the ‘tax refund’…..again…let me say …you won’t get rich by having less money taken out of your check throughout the year….it just won’t happen not in middle class land….unless you’re a secret miser….plus you just may end up owing the government in the long run….however it is YOUR money….make an informed wise decision based on your goals. 😉

    • lindagoossen

      I don’t know where you’d get 2% interest!

      • Michael McGee

        More like .02%

        • Lisa

          .02 and 2% are the same. 2/100ths

          • Leslie

            He said .02%….it’s not the same as 2%. Actually, .02% is equal to .0002, yikes!

  • iamme

    She’s not taking into account that most people that receive a refund didn’t pay anything in. Nothing.

  • Jon

    Most people don’t save more when they earn more, expenses grow as income grows, this includes differences in paychecks due to w-4 claims! By the same token, receiving your money back in a lump sum gives you a different perspective, the hard work (saving it) has already been done, now you can add it to savings or use it for something big. Unless you’re making solid investments and earning significant interest, I will never understand the problem with loaning the government your money!

    • Arnie

      What if the government that is BROKE decides not to cut refund checks, to right the ship? Now your huge tax return is not there! With most pay checks being handled electronically you could put the difference in a savings account, without ever knowing it’s there ( discipline yourself) and at the end of the year take YOUR money and put it where it needs to go. Ramsey logic =’s tell your money what to do! Do let the government or anyone else make your decisions.n

  • blake

    I did get a refund this year, and that’s exactly what I did! Paid off a massive credit card debt from a hospital bill back in May. I already have the emergency fund saved (it’s sealed in an envelope and in the safe). I think I will change my withholdings and contribute that extra 3% to my retirement fund I have been wanting to contribute. My employer matches up to 6% (3% mine, 3% employers) but I can maximize at 6% of mine, so it would be 9% total. Now I think I’d rather do that than have the extra money around this time of year. Thanks for the tips Rachel! btw I have student loan debt and child support to pay, and my wife works full time at home raising our toddler son. It can be done. Spend within your limits.

    • April

      I wouldn’t put all your retirement in one nest egg. If the stock market crashes, your lose what you and your employer invested.. Just a thought..

  • Laurie J Mackeson

    I am in no doubt of the benefits to both “sides” to this topic – pay more get refund & pay less owe more later. I do have a sneaky suspicion that the topic is [somewhat] white-noise in the wider topic of becoming wealthier – a bit like the credit card bonus points for purchasing. Where the reward isn’t/mightn’t be worth the effort.