I’m always amazed at the clients who are thrilled with me when they get a $10,000 tax refund. They just think I am the greatest CPA. I, of course, agree that I might be the greatest CPA they have ever used, but they are really underutilizing my talents if they receive that big of a refund. I have tried to explain about how refunds are huge marketing scam, but it always seems to fall on deaf ears. Hear me out:
Here is a scenario I have suggested to my clients: For all of the rest of this year, you should send me a check for $200 each week. Next year, in April, give me a call and I’ll give you a check for $10,000. And, oh, by the way, if you have some sort of emergency where you need the cash, I will not give it to you until next April.
Would you be so thrilled with me next year? I think you can see the "scam" in this scenario but why is it so blinding to believe that the government holding their own money is so different? Would you loan anyone else your money on an interest-free basis? If so, give me a call, I will be the first in line for a loan.
So hopefully, you can now see the scam. Do you know that you can make this "scam" work in your favor? Ah, perk those ears up! If you file your taxes an owe $1,000 or less, you do not have to pay any penalty or interest on the money. Our generous Uncle Sam will let us just pay the money, interest-free, on April 15.
For those of you with credit cards over 8%, guess what, you should take that extra money and pay off your credit card throughout the year and then pay a balance due on your tax return next April. The IRS interest rate is currently 8% for underpayments. That’s no so bad when you consider some of the other interest rates that may adding to your debts. It gets a lot worse if you do not pay on April 15 so I am not suggesting that you never have the IRS paid off, but leverage your cash. Call your CPA tomorrow and check out your withholdings or estimated payments. Look at your options and decide what is really best for your financial picture.
Donna Bordeaux is a Certified Public Accountant and Personal Financial Specialist with Calculated Moves, CPAs, PA in Lake Wylie, SC (a suburb of Charlotte, NC). For further information about Donna or her firm, please visit www.calculatedmoves.com.
Donna Bordeaux, CPA with Calculated Moves
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.