Why You Should Never Ever Celebrate Getting A Tax Refund – Episode 299

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[00:01] Welcome to the Prosperity Podcast. On this episode of the Prosperity Podcast, we’re going to be talking about why you should never, ever celebrate getting a tax refund. And I know there’s going to be a lot of people thinking, what are we talking about? Are we crazy? After this episode, you’re going to realize why we don’t want to be putting on the celebration hats for that. So Kim, let’s dive into this topic. I think we’re going to do a short, sweet and punchy episode. Is that right? Yes, absolutely. And you said it so well. Just don’t get a tax refund. It cracks me up how many people call it a tax return. A tax return is the form that you send into the IRS. And a tax refund is the money that

[00:48] you get back because, so here’s your big answer, you have paid in too much along the way. And they are now giving you back your money without any interest up to 18 months later. So you typically would file in April and it’s going to be at least June before you see that tax refund. So what you want to do instead is if you’re a W-2 employee, you need to go to your human resources department and you need to say, I got $2,000 or $4,000 or $8,000, whatever it is. And can you please adjust my withholdings so that next year I don’t get any? That’s the solution if you’re W-2. And of course, if you’re a business owner, it is a lot harder because you have to make more adjustments and there’s more things that

[01:48] are variables. And yet you can work with your CPA to not get a refund. Now, of course, it’s not easy to actually make it happen at zero. In other words, where you don’t owe and they don’t owe you either. But frankly, I would rather owe the IRS a little bit of money in April when I file my return or as in the case for me, it’s often October when I file my return because of K-1s and investments and extensions that are necessary because of those. The point is if I owe a little bit, it means that I have been in control of my money all along the way. Not only during the year 2018 when the tax year was at hand, but in January, February, March, April, May, June, July of 2019, as I’m working out my relationship with my money and the IRS’s relationship with my money. So having control

[02:46] and it’s the fifth principle of prosperity and we know this, having control over the assets and my cash flow and the amount of money that I pay to the IRS and when I pay it to them and not letting them use my money without interest is of paramount importance to my long-term financial success. Absolutely agree. You know, if you think about it from the reverse side, none of us would want to loan money to someone at zero percent interest and having it hang out there for up to 18 months. None of us would want to do that. Yep. And yet every day, people that get refunds, that’s what they are doing. Yes. So there we go. We should never celebrate that. And for the W-2 employees, as Cam mentioned, what you can do is talk to human

[03:35] resources about adjusting your withholdings. Now for our business owners, our 1099 or whomever they may be out there, any of those people, there’s one place where you can start to plan for the money. And I know you don’t like to use the word plan, but I’m using it in this term. You can plan for the amount of taxes that you may need to pay. There’s a vehicle that I think is better than any other vehicle where to put your money and plan. Where would you say that is, Cam? So that is the whole life insurance policy that many of you own. And if you don’t and are curious, please reach out to us. We’ll help you learn about this because the whole life insurance policy is liquid. And so you can pay into it

[04:21] all throughout the course of the year, a little bit of extra money. And then when the IRS bill comes, you have the availability of grabbing that dollar and satisfying the IRS extra bill. And then you can spend the next two to 12 months building that account back up again. All along the way, the account itself was not negatively impacted. It kept on growing because you’ve truly borrowed against it and not withdrawn. And so that is a way that you can handle the extra money that you owe to the IRS, which is in a much better position of strength and control than them owing you money. Absolutely. So in this short, impactful, punchy episode, I think as listeners, you’ll realize there’s a different way to look at the way we pay our taxes. And yes,

[05:15] we’ve mentioned in other episodes, if you happen to be a W-2 employee, there are things you can do to reduce the taxes you may pay, maybe starting your own business. You can even get into some easy businesses. You can purchase real estate and other assets. If you’re interested in any of those types of things, my suggestion is just to reach out to Kim at hello at partnersforprosperity.com and say, Hey, I’m interested in, and then fill up whatever that may be in the subject line, ask your question. And Kim, you are so good at answering those questions. I think it’s going to be a treat for all of our listeners. Always happy to help on email. And then if it necessitates, we’ll get on the phone and

[05:57] have a further conversation. And yet email can be so impactful because you can ask your question and I can answer it specifically. And we can both get on with our lives and get good results. Wonderful. Well, thank you for helping our listeners understand a little bit more about taxes. And listeners, thank you for spending some additional time with us today. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.