Sunday, January 10, 2010

H&R Block and TurboTax Have It Wrong

Driving to the office early on a Sunday January morning, you hear lots of radio commercials for H&R Block and Turbo Tax with a very common theme: We get you the maximum refund possible!

They've got it all wrong.

I can get you the maximum refund possible too. Have 100% of your paycheck withheld so that everything goes to taxes will get you the maximum refund possible. If you want to go beyond the maximum, then you can make quarterly estimated tax payments too. Come tax time you'll get all of the excess you paid in back. Which means you made an interest free loan to the government, by the way.

The idea is to pay the least amount of tax legally possible. It is actually better to pay on April 15 the largest amount possible while avoiding any penalties. That way you hold onto your money longer, and earn some interest off of it too.

You also do that through planning major transactions, ideally with the assistance of a qualified professional. The money you pay the professional will be far less than the tax savings you will realize.

Now don't get me wrong. H&R Block and Turbo Tax provide a valuable service to the American taxpayer. But they are not providing a good service when they misinform people on the real goal.


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Anonymous said...

Glad to see I'm not alone in this thought. My friends and co-workers think the doctor must have dropped me on my head when I bring this up. I just don't understand why so many are willing to loan the Government interest free money all year.