Many people look forward to tax season because they anticipate a big refund that’s coming their way that they can use for shopping, a vacation, or any other type of expenditure. However, a tax refund isn’t a bonus, and you shouldn’t treat it as such.
For one, the reason you’re getting a refund is because you’ve paid too much in taxes. Whether this means you earned less than expected or you had more deductions than were accounted for when you filled out a TD1 form for your employer, it’s all the same end result: too much of your income was deducted from your pay.
The disadvantage to you is that you don’t get this money until after you’ve filed your taxes, and you also aren’t earning any benefit (interest) on it either.
Instead of treating a refund as a bonus, what you should do, especially if it’s a large refund, is check with your company’s payroll department and determine why there was such a discrepancy between what you needed to pay in taxes and what was ultimately deducted off your pay.
The goal should be to minimize the amount of taxes you owe or are owed, and what that will result in is a higher and more consistent rate of pay. This means more money every month that you can spend on expenses or put away toward savings.
While you might miss the one-time boost to your cash flow, it will enable you to have more stability in your earnings and allow you to plan and budget better.
