Disaster! Yes, you read that correctly. In my opinion a big tax refund is a disaster. A big refund means that you over paid your taxes during the year so the IRS had your money all year long and you did not. What could you have done with that cash? Paid down debt that was incurring interest? Grow your business? Take a vacation? So many choices when you have your money in your hands.
When I see business owners who love their accountants because they get them BIG refunds every year I just cringe. Those are the worst accountants. They make you over pay so that they look like heroes on April 18th but all they are doing is sending more of your hard earned money into the governements hands before you have to. A refund is the IRS sending you your own money back.
The IRS does pay market related interest on the overpayments you make but guess what …..that interest is taxable!
So as the first estimated tax deadline approaches for 2023, please be careful about the payment you make. Look at your income and expenses for the first quarter of the year. Have your tax advisor do a calculation of what you may actually owe and pay that. If your tax advisor is not willing to do these estimates and calculations with you then you need to find a new tax advisor who will. This is critical in tax strategy, tax planning and over all, CASH management.
Each and every quarter I recommend doing a tax estimate calculation and paying what you owe. My goal for myself and my clients is always to come somewhere between owing less than $1,000 and receiving a refund of less than $1,000. Then I have succeeded!
Reach out to me and lets figure out what you actually owe for the quarter. In addition, if you paid $30,000 or more and you are frustrated and looking for some tax relief, let me show you some tax strategies to reduce your taxes by $10,000 or more.
