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Why Your Big 2014 Tax Refund Is Wasting Your Money

By Dan Caplinger – Updated Feb 15, 2017 at 11:39AM

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A big refund is nice to get, but is it the smartest money move? Find out here.

Everyone loves to get a big refund check from the IRS, and already, millions of taxpayers are looking forward to their 2014 tax refund. But it's not really the smartest move to have a big refund coming your way.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about how tax refunds are actually a waste of your money. Dan notes that getting a refund means you had too much money withheld from your paycheck, giving the IRS an interest-free loan on your 2014 tax refund. He goes through what you need to do to change your withholding to make better use of your money, although noting that you have to have the discipline to save small amounts over time rather than spending the extra money that will show up in each paycheck. Dan concludes that it's not hard to figure out how to boost your take-home pay to essentially accelerate your tax refund for the 2014 tax year, but some will inevitably decide that the forced saving of high withholding is worth the loss of interest on that money.

Dan Caplinger and the Motley Fool have no position in any stocks mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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