Did you know that if you’re doing your financial and tax planning correctly, you can get your tax return instantly? Anyone can do it, with proper planning. Let’s take a look at how it works.
If I’m doing my job right with your financial planning, any money you see in the bank is money you can spend, not money you may owe the IRS. I would much rather allow for anomalies, because that leaves you much safer.
Otherwise, you might get to your tax return and owe another three thousand dollars. That’s a big deal for most people! So if I’m going to make an error, I make an error towards planning against that anomaly.
If something unexpected happens, you’ve covered a portion of it, if not all of it. And if nothing happens, and you have a refund, the money never goes away. And that’s the secret to an instant tax return.
Here’s what I mean.
If you plan it so tightly and you miss it and owe money, you instantly get a penalty. And that penalty is generally between 5% and 15%. So why not go ahead and make sure you don’t have a penalty? All you’re exposed to is that you lost some interest on the money while it’s out of your bank account and in the hands of the federal government.
In fact, that situation results in an instant tax refund! Let’s say you get to your tax return and you have an overpayment of $1,500. You intentionally overpaid. You rounded up on income and down on expenses to be safe.
Well, for the first quarter of the year you’re now in, you’ve been saving money to send in for your taxes for the first quarter. But because of the overpayment, you now have credit with the IRS.
So instead of sending the IRS $5,000 for the first quarter, you just send them $3,500 and tell them to keep the $1,500 overpayment. Then, just take the $1,500 out of the money you had saved up.
Instant tax refund!
Of course, that’s all contingent on planning throughout the year like we talked about last time. Planning in March, then in July, then in December, then doing it all over again.