Judgment Day has come for all of those tax procrastinators. Monday is the deadline to file federal income taxes for 2024, with millions of Americans either getting a refund or owing Uncle Sam. Many of those expecting a refund have already filed, but may still be waiting on their check. As of mid-February, the IRS reported the number of refunds issued this year, and the amount of the average refund, were both down from last year. But as the full numbers come in by the end of the season, those numbers tend to balance out.
There are many reasons why your refund could be larger or smaller from one year to the next, but getting a smaller refund is not necessarily a bad thing. "Tax refunds are a really strange way to save money, because it's a return of your own money," says Richard Rosso, certified financial planner. "It's like eating a dinner and regurgitating it later."
Rosso tells KTRH you're better off keeping that money during the year and earning interest on it, rather than 'loaning' it to the government. "I want people to get as close as possible to owing money, right on the razor's edge," he says. "In other words, you don't get much of a refund and you don't owe much in taxes...that is tax nirvana."
Getting close to that 'tax nirvana' means filing smart, even if you wait until the last minute. "Check for tax credits you might qualify for, you can still make contributions to your traditional IRA, make sure you're maxing out your 401(k)," says Rosso. "You know, there are things you can do to still minimize your taxes, so make sure you take advantage of that."
If you waited too long and just can't make the tax deadline, you can request an extension. But Rosso warns that an extension is not a "freebie." "When you file for an extension, you still owe estimated taxes on the original due date, it's just that you are postponing your filing," he says.
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