Did you receive a 1040 refund in excess of $2,000? If the answer is “yes” something went horribly wrong, and it is time to get more involved with your tax return!
Facts: The government is spending more that it is collecting. The US is borrowing $0.14 for every $1 paid out. The US received a downgraded debt rating in 2011 and another one in 2013. In February of 2012, the US Treasury delayed 1040 refunds due to a lack of funds. IOUs have already been issued in California and Illinois. In fact, Illinois businesses who overpay their sales tax and/or payroll taxes no longer are issued refund checks! They are required to utilize them in a future period. (Not a problem if you will have a “future period” and you don’t NEED that cash in order to get to that future period.)
Tax refunds should be looked at this way: You purchase a car in July for $5,000. You give the seller $10,000. Finally, in April of the following year you receive your $5,000 in change. Based on this scenario, how excited are you to get your change??? This is the truth about a refund.
But I use my refund for saving for real estate taxes? Okay, you are in a much more SERIOUS situation, because an IOU from the government means that you can’t pay those real estate taxes. Now what? Contact Piwonka, CPA, Inc.:
- Run a personalized tax projection
- Establish a tax minimization strategy
- Adjust your withholdings to a reasonable rate
- Open a Money Market Fund with your favorite bank
- Take the difference between the pre-take home check and the post-take home check, and have the bank automatically transfer that amount into the Money Market Fund each time you are paid.
How can you get more involved with your tax return? Have Piwonka, CPA, Inc. run a personalized tax projection for you and adjust your withholdings to a reasonable amount. You’ll receive a larger take home check instead of having to wait for the US Treasury to get around and refund it to you.
Example: Your take home check is $800 and you are paid weekly. After a tax projection, tax minimization strategy, and adjusting the withholdings, your take home check increases to $950. You’ll then set-up an automatic $150 transfer each Saturday from the $950 deposit account to the new money market account. In 52 weeks, your money market account will have $7,800 and earning you interest ($7,800 * 1% = $78). When it is time to pay the real estate tax bill, you’ll be all set!