Dave Carpenter of The Associated Press describes five reasons why having more money withheld from your paychecks — thus practically guaranteeing a tax refund the following year — may make sense for some people.
First and foremost is that it can help avoid the debt trap.
“To get a few bucks back is so much better than to risk going through what could end up being a collection nightmare,” Gunster tax attorney Lu-Ann Dominguez tells Carpenter.
Dominguez says she has seen many cases where people aren’t able to pay the taxes due, so they don’t file. This can lead to the painful world of IRS collections involving liens, levies on bank accounts and ruined credit. In the past month alone, Dominguez has seen 50 tax liens for more than $100,000 put into place, usually against individual taxpayers.
Read the entire article on Bloomberg Businessweek: It’s OK to get a tax refund if you don’t blow it