It’s tax season again, and most of the U.S. will be looking forward to receiving a refund in the coming weeks. In fact, three out of every four taxpayers will be entitled to a refund, with only about one in five actually owing taxes.
Unfortunately, many filers will receive a lower refund due to changes in the tax code that went into effect this year. This isn’t necessarily a bad thing, though.
While it is exciting to receive that check in the mail and rush out to make those purchases you’ve been putting off over the past year, it isn’t really the best outcome when it comes to your taxes. Ideally, taxpayers should strive to neither owe taxes nor receive a refund, meaning that you paid the exact amount of taxes for which you were liable.
Why Would I Not Want to Receive a Large Refund?
Again, as long as you do not owe taxes, you shouldn’t be upset if you don’t receive a refund. When you don’t receive a refund, it means you had more money throughout the year and were able to spend it as necessary.
That few hundred to few thousand dollars likely could have come in handy over the past year when the inevitable unexpected expense pops up. Wouldn’t it have been nice to easily pay off that high power bill during the winter cold front? Or immediately replace the car battery when it died?
The stress caused by not being able to afford surprise expenses could potentially be avoided by adjusting your W-4 allowances and having the correct amount of taxes withheld from each paycheck.
Does Anyone Actually Land on Zero?
While it may be hard to imagine hitting the zero mark on your tax return, it does happen, but not often. On average, only about 6% of tax payors will neither owe nor receive a refund on their tax returns.
The State of Montana has the highest percentage of efficient tax payors, averaging almost 8% of all filed tax returns. The Southeast has the lowest percentage of efficient filers, with Alabama, Georgia, Mississippi, and Tennessee ranking within the bottom six spots.
Contact an Attorney for Help Today
Tax season can be an exciting time, but for many, a refund is still not enough to cover all of the bills that have piled up over the past year. If you received a smaller refund this year than expected, or if you find yourself putting off necessary expenses until you receive your refund, please contact one of our locations nearest you in Alabama, Mississippi or Tennessee for a free, confidential consultation with one of our experienced, licensed attorneys.
Grafton Weinacker is an Associate Attorney at the Bond & Botes Law Offices in Birmingham, Alabama. He holds a Bachelor of Science from Birmingham-Southern College, and a Juris Doctorate from Cumberland School of Law at Samford University. He joined the Bond & Botes team of bankruptcy attorneys in July of 2018. Read his full bio here.