My wife was speaking to me this morning about owing money to the IRS after you complete taxes returns. A tax policy we have for our household is we want to have $0 in tax returns. In short, we don't want to owe the IRS but we also don't want a refund from the IRS. That can be difficult because tax laws change and the tables are somewhat complicated to get a perfect zero for tax returns. Therefore, seeking a tax professional is wise. But why strive for zero tax returns?

Most people are ecstatic about a tax refund after they complete their tax returns not realizing it's their money! To break it down - throughout the year the government has taken too much from you in taxes and is using that money. Then after you complete your tax returns they give you the money back, intrest free. This can be problematic for a household in many ways. For example:

You get a refund of $12,000 in taxes after you complete your tax returns. This means during the year the government took about $1,000 extra dollars from your income and used it ($12,000 divided by 12 months equals $1000). This is an extreme case with simple parameters, everyone's case is different. But if you are having cashflow problems in your monthly budget this could be the issue. So seek guidance from your HR department as well as a tax professional if you are continuing to have a large refund.

As citizens of the United States of America it's important to pay taxes. Obviously, there is a lot of politics in how we feel about taxes, but still we must pay them. No one once the IRS after them, and next week I'll dive into how to handle debts with entities, Lord willing. Please choose Faith over Fear for your Finances and do your best to pay Uncle Sam what you owe... no more or no less.

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