It’s that time of year again, at least in the US, the time when taxes are due. Actually, they are due all year long, but this is the time when we prepare the annual filing. The great reconciliation. In other words, we download Turbo Tax, we plunk in some numbers and we watch with great anticipation for the number at the top to turn green. Woohoo, it’s green! I’m getting a refund!
Yeah, yeah, I know, I get it, I should say “they owe me a refund” and when they owe me a refund it means that I have been lending the government my money, interest free. I began lending them money 15 months ago, I continued to lend them money for 12 months, and only now am I even going to tell them that I want it back. Meanwhile, I’m probably already lending them what I won’t ask for until this time next year. In addition, they can take their good old time making that payment, no late payment fees, no interest, no messing with their credit rating and no calling them at odd hours.
Take your time guys, I can wait. Really, it’s OK. I don’t mind lending you the money. The mental and emotional boost I get when I see that number turn green is worth the opportunity cost associated with that free loan. The number is small, but it’s green and I’m happy.
Maybe the green number will get a little bigger. I haven’t plunked all the numbers into Turbo Tax; I stopped when it turned green. I guess that a small refund is the best result one could hope for. It would mean that I loaned them money, but not too much. People, tax experts and financial whiz kids would tell me that I’m wrong. They would argue that the best result would be if I had paid exactly 80% of the taxes I owed and then strung them along until the last day for the rest of it.
Then I win!
I understand the concept, but I’d rather lend them the money and not have to worry about paying them in April. That other way, the pay-just-what-I-owe-and-hold-back-the-rest method, takes too much energy. My method is easy. Pick a point where I know that the taxes withheld will be a little more than the taxes owed. Done. Easy as pie. Get the refund, feel good, and maybe treat myself to something at the hardware store.
Every refund feels good, but the best tax refund I ever got was when I was in college in the early 1970’s. During the Vietnam War, in addition to the outrageously high Income Tax rates that we had to pay, we also had to pay an Income Tax Surcharge for the war. Yeah, back then we paid for our wars. That may seem like an novel concept, but I wonder how many wealthy wanna-be nation builders would be advocates of invading places today, if they have to cough up an additional 3-4% of their AGI to help defray the cost.
Let my grandchildren pay for those laser-guided bombs, no problem. Suck that out of my paycheck, whoa big fella, what are we doing in (insert favorite war-torn region) anyway? Oh, and in addition to that Income Tax Surcharge, we paid a surcharge on our phone bills. Just think about the stuff the government could buy if they slapped a 10% surcharge on our cable or our cell phone bills today.
It seems the government collected the surcharge for too long, or they collected too much. In any case, they gave some of it back. I couldn’t find much information on the refund process, but as I remember it, I just got a check in the mail one day. I didn’t have to file any paperwork, I didn’t need any receipts and I didn’t need to go to the Post Office and get any forms. The government just did the math and gave me some money back. Yay me.
By the way, we did have to go to the Post Office to get our tax forms before things like Turbo Tax, PDF and the Internet. I know, I’m starting to sound like the old man who walked uphill to and from school – in the snow, but it’s true.
In addition, the forms didn’t turn green.
You had to work your way through the lines, through the schedules, through the special little calculation formula boxes, all the time returning to the 1040. You did this until you got to those two critical lines, Taxes Owed and Taxes Withheld. By that point, you could do the math in your head and when you could write something into the Refund box, it felt great! We also had to go back to the Post Office to mail the forms in. Post Offices across the country had special people working to accept tax returns up until midnight on April 15th. I was actually working at the Post Office on that date one year and we had cars lined up around the block! Seriously, this happened in my lifetime, I’m not making this up. Ooh look, the number is still green.