The problem with tax refunds:
Getting a tax refund at the end of the year feels like a nice bonus from the government, but where does it actually come from, and is it really an unexpected present?
Many of us wait for a tax refund with anticipation of finally being able to spend that cash. A tax refund comes from tax credits and the tax you’ve paid on every paycheck you’ve received from your employer. This is the catch: a tax refund is exactly that, a refund. What it means is that you have loaned money to the IRS. They will hold your own money for an entire year and then pay it back to you as a reimbursement, but only after you request your own money back by filing a tax return.
Real-life example:
Imagine that you’re checking out at the grocery store. The final checkout comes out to $40 but you only have a $100 bill so you pay the cashier with that bill. Instead of giving you $60 in change, the store tells you that they will hold onto that $60 until the end of the year. On top of that, the store requires you to fill out a form at the end of the year to request that $60 back.
This is similar to a tax refund. Although you will eventually get your money back, you lost out on using that cash for bills and purchases when you needed it.
Costly problem:
When you think of it this way, a tax refund isn’t a cause for celebration since you are simply being reimbursed for the excess tax you’ve overpaid throughout the year. If you keep more of your own money by reducing the amount you overpay, you can then afford the things you want instead of waiting for that money back.
Let’s imagine that you aren’t giving your grocery store an interest-free loan and instead just keep overpaying your taxes… a more likely scenario considering the current pandemic. A better way to use your money is paying your bills, purchasing what you need, or paying off credit cards. The average monthly credit card interest rate is around 10-20% and you pay that price so that you can use the money you’ve borrowed. On the other hand, you charge the IRS 0% for the money you’ve loaned to them for a year and that puts you in a losing position. You’re now borrowing at a premium while giving your money away for free.
As a great lyricist once said, “Laid back… with my mind on my money and my money on my mind” —you can make a change and keep more of your own hard-earned money with an adjustment to your paycheck.
The funny thing about IRS, they don’t want you to overpay:
We follow the latest updates the IRS releases and every year they urge taxpayers to make an adjustment to their tax withholdings to avoid having too little or too much tax withheld at work. Overall, the IRS encourages that we make changes to tax withholding so we don’t over give them our money. Why don’t more people do it then?
The truth is that many people already make these changes but usually they have a lot of help. After all, how do you know if you are overpaying your tax bill before seeing the breakdown?
This is what Payboost does for you. Our system gathers your information so that you don’t have to do any complex calculations on your own. We track and calculate the portion of taxes you have paid and help you make the adjustment so that you don’t end up overpaying or underpaying your taxes. The best part is that you don’t have to worry about paying anything back while making use of the hard earned money you’ve worked to earn.
Make a change and receive the benefit now:
When do you use your money? For the most part, the answer is all year long. Payboost does the complicated work to accurately calculate how much taxes you should pay each paycheck to stop you from overpaying your taxes, which puts more money in your pocket every month to pay for the things you need.
Are you ready to level up your financial game? At Grid, our single, powerful mission is to help Americans reach their financial goals. Whether you’re determined to boost your credit score, unlock the benefits of a cash-back credit card, or secure a personal loan, our simple and intuitive app is your ultimate ally. Download the app today and embrace financial empowerment!