Here’s Two Big Tax Myths People Still Believe
We're just over a week away from Tax Day. Here are two of the biggest tax myths people still believe . . .
1. "Getting a tax refund back is bad." The idea here is that getting a tax refund back is bad because it means you gave the government an interest-free loan all year. But the reality is, you probably would have spent that money anyway.
Studies have shown that small tax refunds gradually added to your paycheck get spent . . . while big tax refunds once a year tend to get saved or used to pay off debt. And for most people, OWING $1,000 would affect their life WAY more than getting $1,000 back.
And even if the government IS making interest off of that $1,000 instead of you, you're not missing out on much. In a high-interest account, we're talking about less than $3.00 a month in interest . . . about the same as one small latte from a high end coffee shop.
2. "It's better to NOT make more money to avoid paying more in taxes." There are people out there who still believe that if you take a raise that moves you into a higher tax bracket, you'll actually end up making LESS due to the increase in taxes.
But when you get a raise and move up a tax bracket, only the amount in the higher tax bracket is taxed at a higher rate, not the entire amount you earn. So anyone who tells you to turn down a raise to avoid paying more in taxes is a dope.
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