Well, its tax season again. That means millions of people will be rushing to file before the deadline and just as many will be eagerly awaiting their return. Tax returns are a funny thing. People tend to treat them differently than any other money. The rest of the year they will save, pinch pennies, and budget. When they get their tax return, they go wild.

In fact, I’ve seen people go so far as to make sure extra taxes are withheld throughout the year just so that they can have a large return! One person I talked to said that they did this as part of their saving plan. This does not make good financial sense though. First of all, as I mentioned, people tend to spend the money from their returns more freely. Second of all, you are allowing the government use of your money throughout the year. You are not paid interest or anything like that on your oversized return. Had you invested the extra money, or even just deposited it in your savings account, you would have earned interest on it through the year. By paying too much in taxes through the year, you are losing the chance to earn interest.

I’ve also heard people say that they want to make sure that they don’t owe money at the end of the year. This is probably the most reasonable train of thought, however, it still does not hold water. When you file your tax return, you are telling the government how much money they should have taxed you on. If you either forget about a deduction, or are not aware of one, you will not get that extra money back. It would be financially smarter to pay less throughout the year, and then establish what if any more you owe at the end of the tax year.

With the advent of the Internet, taxes have taken on a whole new life. You are now able to file online, as well as use different computer programs to help you calculate your return and even register to have your tax return deposited directly into your bank account.