Finance Bros and Tax Refunds

March is my favorite time of year. Warmer weather, March Madness, and arrogant finance bros on social media belittling people for getting tax refunds. “You just gave an interest-free loan to the government!!!” “What was the opportunity cost of those lost paychecks!?!?” “Screw the man!!!”

Yes, getting a tax refund means you paid more to the government throughout the year than you owed. Yes, that’s actually your money. Yes, you could have had a little more in your paycheck each month. All those things are true. Do you know what’s really scary, though? When you’re on the other side of the math and you get a surprise $2,000 bill from the government that you weren’t prepared for. That’s the reality for a lot of people. So many of my clients have experienced those types of situations in their past that they have some version of tax season PTSD.

The pendulum has been swinging the wrong direction in recent years. Many people, out of guilt or fear of making a “mistake”, are having too little withheld each month, resulting in them coming out on the negative side of tax return roulette. Never underestimate the power an unexpected debt to the Federal government can have on someone’s financial momentum. Wow!

So what’s the answer? Grossly over-withholding from our paychecks to create a massive tax refund each year? No, I don’t think that’s the answer, either. I’m suggesting most people would be well suited to get a modest refund each year that’s enough to pay their tax professional…..plus a little more. $500, or $1,000, or whatever you’re comfortable with. Here’s the key, though. Once that money comes in, do NOT treat it as a bonus. It’s deferred income, it’s your money. Put that money in your budget, be intentional with it, and let it add value to your life. If you feel like you’re flying blind each year and your tax refund status feels like a complete crapshoot, that’s a tell you need a trusted tax professional in your corner. I think EVERYONE should have one.

For all the finance bros that are earning a little interest on that money instead of “giving an interest-free loan to the government,” I hope you enjoy the $36 of interest you earned on it this year. Maybe even take the fam (and that roll of cash) to Chic-fil-a to celebrate! But when you do, please don’t demean everyone else for getting a tax refund. They are just trying to do good, keep the ship afloat, and not be on the receiving end of negative surprises. Happy tax season, y’all!