If You're Getting a Tax Refund Over $1,000, You’re Probably Not Doing This Right

People get really excited when they get a big IRS refund.

Why, though?

If you’re getting a tax refund, you paid money to the IRS that you didn't owe.

Instead of waiting for a refund, you could have used that cash to pay bills or invest.

Let’s talk this through…

Tax Refund: You’re Giving the IRS a Free Loan

Tax refunds feel great…but is that logical?

It's money that was already yours.

It means you’ve paid the IRS taxes that you didn’t owe.

You’ve given the IRS a loan.

Wouldn’t it feel better to have that extra cash in your pocket?

You could have used it to pay down debt, save for an emergency, or invest it.

The Reality

Most people don’t know they’re overpaying because they haven’t updated their W-4 form in years.

Life changes—kids, marriage, a new job—mean that your withholding might need to be adjusted.

If you’re still claiming “0” exemptions, you could be overpaying the IRS.

Even changing your exemption to “1” can get you more in your paycheck.

The Fine Line Between Overpaying and Underpaying

I'm being all smug about this but I’m making this overly simplistic.

You do want to hold on to your cash, but on the other hand, you don’t want to end up with a big tax bill at the end of the year.

Instead of guessing, use the IRS Tax Withholding Estimator.

It helps you figure out the sweet spot for your with holding, so you’re not over- or underpaying.

Enter your info and the estimator will guide you through your tax situation.

Big Refund vs. Bigger Paycheck: The Choice Is Yours

Do you want a chunk of money after filing your return, or do you want to keep it so you can use or invest it?

At the end of the day, it’s about what works for you.

If you struggle with spending, maybe a refund is helpful.

But if you can handle saving, investing, or paying down debt throughout the year, keeping that money in your paycheck is the better option.

TL;DR

⏩ If your refund is over $1,000, you're overpaying the IRS.

⏩ Update your W-4 to stop overpaying and keep more cash during the year.

⏩ Use the IRS Tax Withholding Estimator to get an accurate picture of what you should withhold.

⏩ Decide what works best for you: more money in your pocket, or a lump sum at tax time?

Let’s Talk…

Tax Professionals -

➤ What do you tell your clients to do?

➤ Overpay and get a refund or hold back to save, pay down debt, or invest?