Many people think getting a tax refund is good, but that's not always true. Here are some reasons why.
- Overpaying Taxes
A refund on your tax return means you paid too much in taxes during the year. This is like giving the government an interest-free loan. Instead, you could use that money each month for savings or investments.
- Missed Investment Chances
When you overpay taxes, you miss chances to invest that money. It could have been earning interest or growing in value instead of sitting with the government.
- Poor Financial Planning
A big tax refund can mean poor financial planning. It's better to break even, meaning you don't owe much and don't get a big return. This shows your tax withholdings are accurate.
- False Sense of Security
A large tax refund can make you feel falsely secure. You might spend it quickly instead of saving or investing it wisely.
- Financial Hardship
Overpaying taxes can make it hard to manage money during the year. You might struggle with monthly expenses or saving for emergencies.
Your Equitable® advisor can teach you about the downsides of tax refunds. By adjusting your withholdings, you can manage money better and take advantage of investment opportunities.
Contact your advisor to find out how to make the most of your investment opportunities this tax season.
