Many taxpayers have the misperception that a tax refund is new-found money. It's not; it was your money all along. During the time you've left it with the IRS, you have not had it available for your use and you've earned no interest on it.

For example, rather than receiving a $1,000 refund, had that same $1,000 been put in a savings account, even at very low interest rates, you could reasonably have earned an additional $30 in interest over a year's time and given that the average refund is almost $3,000, that's close to a hundred dollars you lost by letting the government use you your money. And if you had used that money to pay down your credit cards, your savings could have been several hundred dollars.

(808) 235-4835 Ted Talbott, CPA 46-005 Kawa, Suite 212 Kaneohe, HI 96744 click here to Contact Ted