The IRS rolled out the latest version of its tax calculator on Wednesday after updating it to reflect the new withholding tables. The free tool is designed to help taxpayers be sure they don’t have too much money taken out of their paychecks for taxes.
That’s because getting a big, fat refund is actually a bad thing.
While some people look forward to getting refunds for taxes they overpaid ― and some even consider it a way to save money ― overpaying your taxes is essentially giving the federal government an interest-free loan. The government gets to use your money for the better part of a year, then return it to you without a nickel of interest. So just to be clear: Getting a lump-sum check back from the IRS is actually bad, because you could have had that money in your savings account, where it would have earned interest, or used it to pay off debt ― or used it to not incur debt in the first place, because you had cash on hand.
With the IRS’ free tool, you can ensure you don’t have too much money held out of each paycheck.
