Most people are probably feeling relieved that tax preparation season is over. It can be a very stressful time of the year. This year the average refund was smaller than last. There were no stimulus checks in 2022 and the child credit returned to pre-pandemic levels. While you do not want to owe a big balance, it may not be best to get a huge refund. This would only happen if you paid in a lot more during the year than you would end up owing. The government does not pay you interest on this overpayment and you do not have access to this money if you would need it.

Many people approach income taxes from a reactive view instead of being proactive. People who do not have an active tax plan are likely paying more taxes than necessary. They collect all of the documents and take them to their preparer or do it themselves. These people made decisions during the year without considering tax consequences. Maybe, they took money out of an IRA and had to pay a 10% penalty since they were under 59 ½. Possibly a 401(k) match was not accepted. When spending qualified money, there will be taxes due.

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