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(This is the first in a four-part series about the wise use of your Federal Income Tax Refund.)

It’s that time of year again. Our mail boxes are filing up with envelopes marked “Important Tax Documents”, the TV is littered with ads for H&R Block, Jackson Hewett, TurboTax and the like – heck, even the podcasts I listen to are advertising for TaxAct and TurboTax. We all know what that means: the deadline for filing our tax returns is looming.

I’ve also noticed something a little more subtle. I’ve recently noticed a lot more commercials – especially on radio, for some reason – for big-ticket electronics. Just this morning, I heard a commercial for Visio that blatantly pulled back the curtain to reveal to the world just what that company intended to do. The ad to which I am referring specifically addressed the consumer’s upcoming tax refund, as in, What at you going to do with your tax refund? Why not buy a Visio TV? (or something of that nature).

Please understand I’m not villainizing Visio, there are plenty of companies doing the same thing, it’s just that I heard the specific Visio ad today, which prompted this post.   

It’s no wonder companies like Visio are out to get your hard-earned tax refund money. The problem is… YOU!

Yes. You. Well, maybe not you, but someone like you… and me.

The problem is, too many of us don’t realize that our tax refund money is OURS. I’ve heard too many people refer to their tax refund in a way that indicates they believe their tax refund is nothing more than their annual gift from the government, and therefore, why do anything more than use it to buy a gift for yourself – like a new TV.

Let’s start by breaking down the term “Tax Refund”. It’s one of those terms we’ve heard so much that we don’t even think about what it really means.

So, what is a tax, anyway? The dictionary defines tax (n) as a compulsory contribution to state revenue, levied by the government on workers’ income and business profits or added to the cost of some goods, services, and transactions. Don’t lose that first part – “a compulsory contribution”. That’s a fancy way to say the government takes it from us whether we want them to or not.

Google did a good job defining tax. Let’s see what it has to say about refund. Refund (n) a repayment of a sum of money, typically to a dissatisfied customer. Perfect! That means that in order to get a refund you had to pay something in to begin with. If you pay for something, you would have, presumably, worked for that money, right?

OK. Let me just pause for a moment to address those of you who are sniggering at me, saying under your breath something like, Yeah, but what about those get a refund when they didn’t pay anything in taxes to begin with? Or, those who get more back than they paid? I’m not talking about that; that is a political discussion I’m staying away from. Please don’t even waste your time in the comments writing about it – get your own blog.

What I have to say below is applicable to anyone who gets a refund. 

Too many people don’t see that a tax refund is not a bonus you get from the government once a year. A tax refund is you proving to the government that it took too much of your money so it has to give it back to you – you are the dissatisfied customer to whom the government must repay money.

A tax refund is YOUR money. Not just because your name is on the check, but because it was yours all along – the government took too much so they have to give it back. So you can look at this a couple of ways.

A tax refund is either: a) a bonus from the government or b) a forced savings account that pays out annually.

I remember growing up, the bank we used was always advertising its Christmas Club and Vacation Club accounts. I never used one, but I knew plenty of people who did. The premise behind these clubs was simple: The bank automatically took a predetermined amount from your checking account on a regular schedule (weekly, biweekly, or monthly) and deposited it into your Club account. While these deposits were in your name, they were inaccessible, much like a Certificate of Deposit (CD). (A CD is a commitment to keep money on deposit for a set period of time for a guaranteed rate of interest – withdrawing early can result in forfeiting as much as all of the interest and even some of the principal.) The Club accounts had a maturity date where the bank would cut a check to the depositor for the amount saved. People loved these accounts because they were forced to save a set amount of money that would be paid out to them at a set time – Christmas Club paid out in late November (to pay for gifts) and Vacation Club paid out in early June (to pay for vacation).

What’s the difference between these Club accounts and your tax account with the IRS? Essentially nothing, other than you don’t know how much your refund will be until you complete your tax return.

Why does this matter? And what do we do now?

Stay tuned for the next post. Or, sign up for my newsletter to have it delivered straight to your inbox as soon as it is published.