Refund Income Tax

If you are like the majority of taxpayers, you love to get a tax refund. People like to think of their income tax refund as a nice forced savings account. You can treat yourself every year with your cash windfall from the government. Often you just need the money to pay off some credit card debt or other bills. However, a tax refund is no reason to celebrate. In fact, it is usually the taxman celebrating. You are giving the government a free loan. You could instead keep your money in the first place. Maybe you could pay off some debt. You may even be able to save for a vacation. This year, make sure you do not get a tax refund.

First, you have to ask yourself why you are getting a refund. Most likely, your employer is taking too much tax money off your cheque to send in to the taxman. You should discuss your income tax with your human resources manager or employer. You will get a form to fill out if there are any changes that you need to make. You have to remember to update this form whenever there is a change in your life that affects your tax status. This could include marriage, children or home ownership. Consider other deductions that you may have such as registered retirement savings plans.

There is an easy way to calculate how much less you should have deducted in taxes off your pay cheque. If your employment situation has not changed, take the size of last year's refund, and divide it by the number of paycheques you get. The result is the amount of money you should keep. Think of the other things you can do with that cash.

Various websites provide you with online calculators. These will tell you how much you should have deducted in income taxes. If you can find a government calculator, you can be sure the calculation is correct.

This year, do not hand over your money to the government when you could be using it yourself. This year, celebrate the fact that you did not see an income tax refund.