On a weekly or monthly basis, the difference in take-home pay is minimal, Wapnick says of overwithholding. The alternative to a big yearly refund, he says, is seeing the money frittered away on non-essentials throughout the year. Estimating tax liability with precision can be difficult. Held, a warehouseman who spent a career in the Navy, likes to estimate his tax liability a bit low, so that he ends up owing IRS when he files a return. If I get a refund now, it means I don't get to enjoy the money during the year.
Some taxpayers plan so they can have it both ways.
Rather than splurge, he just put it in the bank. The extra contribution to the plan may draw a bigger matching contribution from your employer. So you've effectively given the government that interest. Anyone who owes money on high-interest credit cards should be putting every available cent toward retiring the debt. Total interest payments would be halved, and the debt would disappear in less than 3 years.