Like many taxpayers, my wife and I received our tax refund check from the Internal Revenue Service this past week.  The amount of the check was $5,000 even. 

Now, there are a lot of people who love receiving tax refunds, especially if it’s a sizable amount.  I remember back in high school when I got a job as a stock boy at a grocery store, the training coordinator went on and on about how she’d rather get a check from the IRS rather than write them one.

If you think this way, stop right in your tracks.

Getting a check from the IRS, particularly a big refund, is deceptive.  All it means is that you gave the government an interest-free loan for almost a year.  In other words, the government kept money that was yours and that you could have put in your pocket or invested sooner.  You’re allowing the government to withhold too much of your money, and you’re cheating yourself.

Controlling the amount of taxes you pay, including how much you give the government upfront, is as important as anything else when you’re trying to create wealth.  It’s not how much you make.  It’s how much you keep.  The $5,000 above is too much for my taste.  I wish my wife and I had had a good part of that throughout 2007 instead of receiving it now.  Nevertheless, it’s a lesson learned.

Of course, if you’re not an employee and, instead, are an entrepreneur, you don’t have to deal with with-holdings and related minutia.  Entrepreneurs and business owners control how much they pay in taxes and don’t have to worry about giving the government interest-free loans.  :-)

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