Tax time is upon us. This is the time when Uncle Sam mandates that we reconcile taxes that were collected throughout the year by way of payroll withholdings and estimated payments to see what’s rightfully due to the IRS. Individuals have until April 15 to get their tax return prepared and their tax liability paid or suffer the consequences of penalties, interest and/or the wrath of the IRS.


Many people are eagerly anticipating the largest lump sum check they’ll receive the entire year. This check is the result of a tax refund. If you’re expecting a large tax refund this year, I’m sure you can’t wait to get your W2s, 1099s and all applicable tax forms so that you can file your tax return and get access to your refund. After running up balances on credit cards and/or spending more than what was budgeted for during holidays, a tax refund or a tax rebate of any kind would be appreciated by all.

Tax time can be considered the day of reckoning. This is a time when you come face to face with the amount of money you earned throughout the year then suddenly gasp, wondering where all your hard earned money went.

Would you lend a close friend or blood relative money at zero interest and no payments until next year? In an effort to have access to the money you lent to your friend or relative sooner rather than later, would you allow a local loan shark to charge you a 20-200 percent annual interest rate? Would you cash the check you received from the local loan shark at a check cashing company who’s going to charge additional fees in giving you access to the money that is rightfully yours to begin with?

When spoken in these terms, I’m sure that most of us would answer the above question with a resounding no! Yet, this is exactly what millions of people do each and every year. They lend Uncle Sam money with a zero percent interest rate. They pay astronomical fees and interest for refund anticipation loans. These loans give them access to their refund within minutes or days as opposed to the IRS turnaround time, which is two to six weeks. They then take these refund anticipation loan checks to check cashing companies and pay even more fees to cash these checks.

In the past, I would ridicule tax preparation companies who aligned themselves with third party organizations that offered various high cost products and services. After taking a closer look at their business model, I came to the realization that if they did not offer these products and services, most of their clients would take their business elsewhere. People want their money and they want it now.

Considering the fact that 70 percent of households live paycheck-to-paycheck, you can understand why people need to have access to their money as soon as possible. When you factor in the fact that the average American saves less than two cents for every dollar earned, you begin to understand that money received during the tax season represents the only form of savings the typical American does on a consistent basis. Because of this reality, I’ve always been hesitant to suggest a way that millions of people who are in need of extra money can access their hard earned money each and every paycheck versus once a year during tax season. For if they followed my advice without an iron clad financial plan, I fear that the extra money in their paycheck will be absorbed, spent and be unaccounted for. Only this time there will be no tax refund to serve as a bailout.

We can continue this “little man can’t get ahead” mentality of managing our money or we can become more responsible and begin to make our money work just as hard for us as we work for it. I encourage you to stop lending interest free money to the IRS only to receive a negative return on your money once you factor in bank and check cashing fees for the privilege to have access to your money ASAP when you could have and should have had access to your money all year long. In the meantime, use this year’s tax refund to establish a financial game plan that will allow you to get your spending under control and fund much needed savings goals such as emergencies, furniture, car, house, school, etc. The IRS welcomes this advice. They prefer you come close to breaking even on your tax return for it’s an administrative nightmare to process millions of tax refund checks each and every year.

If you aspire to have a better handle on your money I encourage you to seek “tax shelters” not “tax refunds.”

Here’s how you access your money today versus next year:

Form W4 Withholding Allowance Certificate. This form instructs your employer on how much to withhold from taxable wages. Remember that exemptions and withholding allowances are not the same. You may be entitled to additional withholdings if you qualify for various deductions and/or credits.

Receiving your money throughout the year and managing it wisely is the true definition of a “rapid refund.”

(Mortgage and Personal Money Coach Damon Carr is the owner of ACE Financial. Sign up for Damon’s FREE Online Newsletter at Damon can be reached at 412-856-1183.)

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