Every year when we go to do our taxes, our accountant tells us that we need to claim higher deductions. She says she wants us to have no tax return. A lot of accountants will say this and I can see their reasoning behind it. Why give Uncle Sam an interest free loan when you could use the extra money during the year. I can totally see her point.
The main reason why I still decide to claim married and zero is because while I give Uncle Sam a free loan, I like to get a nice return at tax time. If I claimed more deductions I would probably clear an extra $100/month. But what would I do with that money? Would I be disciplined enough to put that extra money into savings, or onto debt payments? Yes, but probably not all of it. I’m sure some of it would be used to purchase useless junk that I don’t need. Therein lies my reason for not claiming more. We like to think of it as an automatic savings account. The wife and I always plan to use that money on certain things. This year it will probably be used to pay down the camper loan. My thinking on this might change after all our debt is paid off, because then we will likely invest more. I love making large payments on debts. It keeps me more motivated doing that.
Do you like to receive a larger return at the end of the year or would you rather have the money now? Do you think of it like an automatic savings account?