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RUSH: Kentwood, Louisiana. Sarah, I\u2019m glad you waited. Welcome to the program. Hi.<\/p>\n
CALLER: Thank you for having me, Rush.<\/p>\n
RUSH: You bet.<\/p>\n
CALLER: I was wondering, at the end of year we do our taxes every year, right? I was wondering, what\u2019s the point of doing these taxes if they\u2019re just gonna give us our money right back to us?<\/p>\n
RUSH: What do you mean?<\/p>\n
CALLER: Well, every year after you do your taxes they send us a bunch of that money right back to us, right?<\/p>\n
RUSH: I wish.<\/p>\n
CALLER: ‘Cause my dad gets about —<\/p>\n
CALLER: Every year we do our taxes, right? And then they send us a portion back to us, right?<\/p>\n
RUSH: You\u2019re talking about your refund?<\/p>\n
CALLER: Yes.<\/p>\n
RUSH: Oh. Oh. Oh. You\u2019re 17 years old?<\/p>\n
CALLER: Yes, sir.<\/p>\n
RUSH: Oh, oh, I\u2019m sorry. Okay, good. Let me explain to you what that is. Actually, I\u2019m glad you called. I misunderstood. You sound older than 17 to me.<\/p>\n
CALLER: Oh.<\/p>\n
RUSH: If your family is getting a tax refund — and please, Sarah, don\u2019t doubt me on this — it simply means that your family is paying more tax than you owe during the year. Now, a lot of people do this on purpose. Does your dad work or your mom work or just one of them?<\/p>\n
CALLER: My dad works. My mom is on disability.<\/p>\n
RUSH: Does your dad run his own business or is he employed someplace?<\/p>\n
CALLER: He\u2019s a truck driver.<\/p>\n
RUSH: Okay. Well, the odds are that every paycheck money is deducted, some for federal taxes, some for Social Security, that\u2019s payroll taxes, and there are other deductions in there. Now, your father sets up how much he wants deducted from his paycheck with the employer on his W-4 form. That\u2019s where he claims the number of dependents in his family like how many children, how many people live in the house, and then that determines how much money is deducted from his check every pay period. Then when you file your taxes, what happens is, if you\u2019ve overpaid based on what you owe, if your father has overpaid, that\u2019s what your refund is.<\/p>\n
They are giving you your money back, but they\u2019re not paying you any interest on your money that they have held. The fix for this is for your father to readjust his dependents on the W-4 form. Now, some people like getting the refund because it\u2019s a big lump sum of money that they get every year. Others argue that it\u2019s a mistake to let the government keep that money all year so that you can\u2019t use it, then send it back to you in a lump sum every year without any interest. But they\u2019re not sending you back nearly everything that you have paid. They\u2019re not sending back every tax dollar your father\u2019s paid. It\u2019s just a portion of it.<\/p>\n
CALLER: Okay.<\/p>\n
RUSH: So your question was, why do you have to pay it in the first place if they\u2019re just gonna send it back to you, right?<\/p>\n
CALLER: Yes, sir.<\/p>\n
RUSH: Right. Well, they\u2019re not sending nearly all of it back to you.<\/p>\n
CALLER: Okay.<\/p>\n
RUSH: They\u2019re just sending back what you have paid that you shouldn\u2019t have. You didn\u2019t owe that money.<\/p>\n
CALLER: Then why do they take it in the first place if we didn\u2019t owe it?<\/p>\n
RUSH: Well, because my guess is that your dad wants to play it safe and not underpay his taxes and not have to owe anything. My guess is that your dad\u2019s like everybody else, doesn\u2019t want the government come hounding him for money, so he\u2019s having more withheld from his paycheck than necessary so that he doesn\u2019t become a target. Because it\u2019s all up to your dad, really, whoever the employee is, you\u2019ll find this out when you get your first job. I\u2019ll tell you a little story. I never got a big refund. When I first started working, I never got a big refund. And a lot of people I worked with did. And every year they\u2019re bragging to me about their refund and so forth. My father was a lawyer and his secretary did my taxes, so I\u2019d send her all my credit card receipts and I said, “Look, Joyce, just play every game you can here, will you? I want to get a big refund like all my friends are getting.” She said, “I can\u2019t do anything with these credit card receipts. You don\u2019t have any deductions. It\u2019s real simple. You\u2019re not getting a refund because you\u2019re not having that much withheld.”<\/p>\n
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CALLER: Yes, sir. I understand better than before.<\/p>\n
RUSH: Okay. Good. It\u2019s real simple. Your father has determined that it\u2019s probably safer to have more money withheld from his check every pay period than is necessary just to be safe, just to make sure that all of his taxes are paid.<\/p>\n
CALLER: Okay.<\/p>\n
RUSH: And if he ends up having more withheld than was necessary then whatever that amount is is refunded to you. But it\u2019s nowhere near the total amount your family paid in taxes. Whatever the refund is it\u2019s nowhere near the total amount. Your family still paid a lot of taxes.<\/p>\n
CALLER: Hmm.<\/p>\n
RUSH: Hmm. Yeah. You\u2019re frustrated. It\u2019s not even your money yet.<\/p>\n
CALLER: I\u2019ve already seen how much they\u2019ve taken out of my paycheck. I started work last summer, and they\u2019re taking $50-plus out of my paycheck.<\/p>\n
RUSH: Well, then you do know about it. They\u2019re taking $50 plus out of your paycheck. Do you get a refund when you file an income tax return?<\/p>\n
CALLER: Not yet. I only started last summer.<\/p>\n
RUSH: Okay. Well, you haven\u2019t earned enough money yet, then, to legally file a return, or maybe you have and you just don\u2019t know it in which case we\u2019re not gonna tell anybody. Because on the EIB Network ignorance of tax law is fine with us. But you will remember this conversation as you get older and you see what\u2019s happening, and my advice would be do what you want. I personally, once I figured out what was happening, every April 15th, Sarah, I want to either owe them nothing or just a little. I want complete use of all of my money, as much of it as I can throughout the year. Because whatever I get back in a refund is never gonna have any interest to it so that means the government\u2019s kept a lot of my money, and I\u2019ve lost the value of it.<\/p>\n
But some people like the big refund because it\u2019s the one time in their lives they\u2019re gonna have that big lump where they can go out and buy the plasma TV or what have you. But I appreciate the call. Thanks for the opportunity to explain it. Sorry I misunderstand you at first but I gotta run. Sarah, let me tell you this. This is the best way to explain this to you. When I die, which is going to be a long time from now, I want my last check to be written to the IRS, and I want it to bounce.<\/p>\n","protected":false},"excerpt":{"rendered":"
RUSH: Kentwood, Louisiana. Sarah, I\u2019m glad you waited. Welcome to the program. Hi. CALLER: Thank you for having me, Rush. RUSH: You bet. CALLER: I was wondering, at the end of year we do our taxes every year, right? I was wondering, what\u2019s the point of doing these taxes if they\u2019re just gonna give us […]<\/p>\n","protected":false},"author":23,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","ngg_post_thumbnail":0},"categories":[],"tags":[],"yoast_head":"\n