The average American will receive a $2,500 tax refund this year, a statistic that left CBS “The Early Show” host Harry Smith “stunned” on the April 11 broadcast.
“I am stunned to know what the average refund is,” Smith said. “$2,200 [in 2007], that’s too much, right?”
“It is too much,” said Money magazine senior writer Janice Revell.
She explained that the checks actually represent an interest-free loan between the government and taxpayers.
“When you get your refund it feels like this big windfall, you’ve won the lottery, but in essence what you’ve done is you’ve loaned your money, interest-free, to Uncle Sam for the year,” Revell said. “It just makes no sense.”
But Revell wasn’t suggesting Americans get too much of their money back. She was suggesting they’re giving too much to the government in the first place.
She said that when tax refunds get to be more than $500, a taxpayer should adjust their withholdings by filling out a new W-4 form with their human resources department.
Revell also told viewers to spend 10 percent of what they get back as a way to “treat yourself,” but use the rest to reduce credit card debt, invest in retirement and build an emergency fund.