Money Rehab with Nicole Lapin - The Truth about Tax Refunds

Episode Date: April 7, 2022

We know you probably love getting your tax refund, but news flash: you shouldn’t. Today, Nicole explains. See omnystudio.com/listener for privacy information.

Money rehabbers, you get it. When you're trying to have it all, you end up doing a lot of juggling. You have to balance your work, your friends, and everything in between. So when it comes to your finances, the last thing you need is more juggling. That's where Bank of America steps in. With Bank of America, you can manage your banking, borrowing, and even investing all in one place. Their digital tools bring everything together under one roof, giving you a clear view of your finances whenever you need it. Plus, with Bank of America's wealth of expert guidance available at any time, you can feel confident that your

money is working as hard as you do. So why overcomplicate your money? Keep it simple with Bank of America, your one-stop shop for everything you need today and the goals you're working toward tomorrow. To get started, visit bofa.com slash newprosmedia. That's b-o-f-a dot com slash n-e-w pros p-r-o-s media. bfa.com slash newprosmedia. It's April, money rehabbers, and you know what that means. It's tax season, baby! If you listened to my episode on important financial deadlines this year, and that's episode 246, by the way, you'll know that most Americans are looking at an April 18th due date for filing taxes. And if you listen to that episode, you'll also know that you should be working on filing your taxes like right now. But if you're struggling with all the paperwork, I get it. I will have some tips for you in the upcoming episodes.

But today, a reality check. I know the silver lining of taxes might be that you get some money back. And what a great silver lining that is. We all like getting checks in the mail, right? But here's where the reality check comes in. That's not free money you're getting in the mail. This was always your money. Now it's just coming back to you. I've been getting a few questions to the Money Rehab email about this. By the way, that's moneyrehab at nicolelappin.com. Questions like, WTF is the point of tax returns and tax refunds anyway? Well, I have some good news for you.

We actually did an episode about this, episode 114, titled, for your convenience, How to Get Your Tax Refund and Why You Shouldn't Want One. But don't worry, I'm not going to make you go back into the archive and dig up the episode. We're going to share that episode with you again right now. Enjoy. Hey, guys. Are you ready for some money rehab? right now. Enjoy. Hey, guys, are you ready for some money rehab? Wall Street has been completely upended by an unlikely player. GameStop. And should I have a 401k? No, I know. You think the whole world revolves around you and your money? Well, it doesn't. I got charged for wasting our time. I will take a check. You recognize her from anchoring on CNN, CNBC, and Bloomberg. The only financial expert you don't need a dictionary to understand.

Nicole Lappin. Tax season is long over. Thank God. And that means that if you were supposed to get a tax refund, you should have already received it by now. Today, I'm going to be filling you in on how to get your check from Uncle Sam if you haven't received it yet. But first, I'm going to tell you why you actually don't want a tax refund in the first place. Yeah, you heard me right. I'll let that sink in for a second. I know this might come as a shock to you because you probably love getting a tax refund. It feels like bonus money from Uncle Sam, right? And what's better than bonus money? I can't think of very much. Plus, you probably didn't know how much money you'd be getting back before you filed, so it's the most pleasant of surprises when you get to add some liquidity back into your

spending plan, right? Maybe that chunk of change from your tax refund will help you get a little closer to something that's been in your endgame category for a long time. What is not to love about that? But here's the thing. This is not free money from the government. Your tax refund is not like a stimulus check. Your tax refund is and always has been your money coming back to you. Let's start from the beginning. WTF is a tax refund anyway. Well, you know how paying taxes works in the U.S. If you work for a company, you probably get your paycheck on Fridays. You look at the numbers and think, hmm, this is lower than I thought it would be. Where's the rest of my money? In all likelihood, some of your paycheck went to your health care and retirement accounts, but a whole lot went to taxes. If you got a tax refund, that means that the federal government

overcharged you for your income taxes during the year and is now giving you back the extra funds they took. It's exactly what it sounds like. A refund. And that sucks. Sure, you get money back eventually, but that's money that you could have been spending on rent and groceries and ideally investing. Instead, the government basically took out a loan from your paycheck and then paid it back to you without interest. That's a pretty sweet deal for Uncle Sam. On the other side of the coin, when you take out a loan from the federal government, like a student loan, for example, you definitely have to pay it back with interest. So why is it that when you owe the government money, they charge

you interest, but when the roles are reversed, the government doesn't play by the same rules? It's one of my biggest pet peeves. And it's worth noting, while I think tax refunds are totally wrong, you're not doing anything wrong. If you're getting a tax refund, you're in the same boat as many, many other Americans. But there is one way you might be able to give the government more info so that they don't overcharge you during the year, or at least overcharge you that much. First step is going back and checking with your W-4. Remember that old thing? A W-4 form is one of the many pieces of paperwork you had to fill out when your company hired you. No shame if you don't remember what

it looks like or if you didn't pay that much attention to it at the time. But basically, your W-4 helps the government project how much income tax you should be paying. And then when it comes to tax season, you set the record straight when you file your return. When you look at your W-4, see if you're missing any credits or deductions that you plan on taking. If so, talk to your employer about submitting an updated W-4. Having your W-4 accurately reflect your deductions will affect how the government projects your taxable income and should reduce the amount they take from your paycheck. Okay, rant is over. Now let's talk about how to get that refund if you are indeed owed one. So when you filed your taxes, you knew right away whether you'd be getting any money back from Uncle Sam.

If you haven't received it yet, it's time to drag that refund down. In order to check the status of your refund, I'd recommend having a copy of your tax return handy because you'll need to have on hand your social security number or ITIN, your filing status, or whether you filed single or jointly, and the exact refund amount reflected on your tax return. To see what's going on with your refund, go to irs.gov slash refunds and hit the track your refund button. And lucky you, you don't need to sign up for an IRS account in order to do this. But you do need to enter a few pieces of information. Here are a couple of questions you might run into. If I file jointly, should I use my social

security number or my partner's? Here's your answer. You can use either. Easy peasy. Here's another FAQ. Where the fuck do I find the refund amount? Well, you find your expected refund amount on your tax return. That number will probably be line 35A or 14A, depending on how you filed. The IRS is letting folks know that they should expect delays if you mailed in your return or if you claimed the earned income tax credit. If neither of those situations apply to you and it's been more than three weeks since you filed, you should probably give the IRS a call. I know that sounds scary, but they're not going to bite you. You can call the IRS at 800-829-1040. For today's tip, you can take straight to the bank. Take a minute to double check that you

actually did receive your tax refund. Depending on how you filed, your tax refund will either have been sent as a paper check or deposited directly into your bank account. Don't assume that your tax refund will go through without a little nudge from you. Take a few minutes to make sure your money, yes, your money, made it back to you. Money Rehab is a production of iHeartMedia. I'm your host, Nicole Lappin. Our producers are Morgan Lavoie and Catherine Law. Money Rehab is edited and engineered by Brandon Dickert with help from

Josh Fisher. Executive producers are Mangesh Hatikader and Will Pearson. Huge thanks to the OG Money Rehab supervising producer, Michelle Lanz, for her pre-production and development work. And as always, thanks to you for finally investing in yourself so that you can get it together and get it all.