Well, I don’t know about you, but I am really, really going to miss MOVIES 10. For those of you who don’t know, it was a deep discount movie theatre in Henrietta. I personally went to see so many movies over the years that I wanted to see, but not enough to pay full price for, that I missed in the theatre — or that were too violent or scary, according to my spouse, for her to see them with me. There are a few other discount theatres left, but they are not MOVIES 10. In addition, for 20 years now, I have been telling college students that one way to save everyday money in college is to see movies later at a discount theatre. Now, that will be much harder for many Rochester area students.
On a different subject, you know it is taxes time when there are more tax preparation commercials on television than there are pharmaceutical or attorney advertisements. I, for one, feel bombarded. The only good thing is that, although tax time may be painful for those who have to pay, at least taxes don’t have all of those horrible side effects that the drug commercials tell us about. It seems that sometimes the recitation of side effects takes up more time than the rest of the commercial telling us why we need the drug.
An interesting, but not unexpected, thing that I am sure you have noticed is that, as technology has become more and more a part of our world, the number of tax preparation websites has exploded. No more just H&R Block, although it has its own product — TaxCut. Let’s see, there are OnePrice Taxes, TaxSlayer, TurboTax, Free Tax USA, Complete Tax, TaxSimple, USTaxFiler and Encore Tax, just to name a few. I can’t recommend or endorse any of them, personally, but if that is the route you want to go, do your research. Check out their websites and look for any independent and reliable customer reviews.
Although it seems that I write about this every year at this time, I can’t in good conscience fail to mention that, having a significant tax refund every year may not be in your best financial interest. Remember, you want to meet those fiscal goals that you have thought about, developed and committed to, and you should want to do anything, no matter how small, to ensure that you meet those goals.
In my opinion, you should adjust your withholding and any estimated tax payments so that you don’t receive significant tax refunds, and, it’s OK to even plan and save for having to pay a small amount of tax.
To avoid that big refund, you can make any adjustments to your withholdings or payments for the current tax year, based upon your prior year’s returns. However, if things change during the year, you will need to be proactive about making any necessary adjustments. Here are some examples of things that will require those adjustments: receiving a raise, being unemployed for a part of the year, getting married, (so that you may be filing jointly), getting a divorce, (so that you won’t be filing jointly), having a child, and buying a home with a new mortgage and new real estate taxes. Of course, a lot may depend upon whether you itemize. Your tax preparer or service can help you with all of this, so that you get it right.
The bottom line is that you could be better off using the amount of a significant tax refund during the year to meet some of your fiscal goals, rather than letting Uncle Sam, President Trump, Governor Cuomo, Congress, or whomever you consider to be your Government, use it interest-free for the year.
There are so many things you might do with that anticipated refund during the year, depending upon your situation and your fiscal goals. You might be one of those who could benefit by paying down some high-interest debt, like on credit cards or car loans. Perhaps you haven’t fully funded your emergency and anticipated expenses savings account, which could be earning interest for you, even though the rates are low. Then you might consider contributing more to you retirement, children’s college fund, or even making some additional principal payments on your mortgage, so that you can retire it early.
Even if you don’t feel that you have the time or discipline to do some of these things, and you use that refund as a form of easy “forced savings,” which you have gotten into the habit of using for vacations, etc., why not just set up a monthly direct deposit from your income source, so that it is sitting in an interest-bearing account, waiting for you to use it for that forced savings purpose?
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program.