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Are large refunds a good thing?

Nearly everyone likes surprises and gifts of money. However, a large refund of your own money is not a gift! If you routinely get a large refund, you are in essence, letting the federal government serve as the keeper of your money for free--because the federal government does not pay interest on overpaid taxes (your money). You are giving the government an interest free loan. Think of this another way--no one would agree to work for an entire year and receive the paycheck at the end of the year. If you routinely get large refunds from overpaid taxes, that is exactly what you are doing.

Could you and your family use the additional dollars during the year? Even placing the dollars in a bank savings account will earn some interest or additional money that could be used to pay routine bills or make payments on long term debts.