Singletary: Tax-refund recipients defend practice

Other readers offer similar advice to regular refund recipients. Here’s a sampling of comments on a recent column in which I urged people to love their refund less.

• “If you overpay, you’re crazy.”

• “I know people who use their withholding as a savings plan. With the ease of direct deposit, why should saving a small amount from your paycheck be so hard?”

• “When you get a refund, that means you have not only given up use of some of your own money for the entire previous year, but you loaned it to the government, interest-free.”

This year, it’s likely that many people didn’t notice that they got a slight increase in their regular paychecks due to the 2017 Tax Cuts and Jobs Act. This, in turn, impacted their typical and coveted refund, as this money was spread throughout the year instead of presented in a lump sum. At the same time, certain tax deductions vanished, and many folks are just starting to realize how that affected their refund amount, as well.

Here’s what some readers who deliberately get a refund have to say to critics (and columnists) who try to get them to reduce their refunds.

• “I understand the logic. I am a saver and I also invest into retirement accounts. The main reason I like the bigger tax refund is because that is money that I have ‘saved’ with no ability to dip into it except once it arrives. I usually break it into three piles, one for vacation, one for house maintenance and one for savings.”

• “For some people, like myself, the tax refund is rather like a locked account, a way to save for a known expense without worrying that I might use it on other things before I save enough of it for its real job.”

• “The idea of getting a refund is very appealing, because if you make under $30,000 to even $40,000 with children, it is so hard to save.”

• “People who are very good at managing money always say stuff like this to mere mortals like me, who are not particularly good at managing our money. So, for you, yes, it seems silly to give the government a loan each year. For me, who has had years where I owed the government big money (by withholding too little), or who faced the pleasant surprise of getting a nice check in the mail, the peace of mind is well worth the alternative horror of learning that you owe the government thousands!”

To serial refund advocates, I hear you. I get that people struggle to manage their money and employ various strategies to save. So, yes, getting a tax refund isn’t a bad move if you wouldn’t otherwise save the money.

But here comes the rebuttal that needs to be said — and repeatedly. Just because something has worked for you in the past doesn’t mean you shouldn’t re-examine its effectiveness.

If you’re carrying debt on a credit card with a 20-percent interest rate, waiting to get a lump-sum tax refund to pay it down is costing you money. And that’s bad money management.