07
Apr

What to do if you had too much taxes withheld

Posted by Sara M. Varese

For those of you who think that receiving a big tax refund check is an early Christmas present, think again.  That money wasn’t free – it was yours to begin with.  The reason you received that refund  was because the W-4 that you had filed was withholding too much, maybe due to your current marital or parenting status.

And don’t think that the money the IRS is withholding is a sort of savings plan either because it did not collect any kind of interest or make you any money of any kind.  You are better off automatically transferring money into your savings account from your checking account on a regular basis than letting the IRS hold on to your money interest-free.

So, if you had too much taxes withheld, consider filing a new W-4 with your employer and invest it into an interest-bearing account (even a savings account will give a much greater return).

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