Are tax refunds a good thing?

Speaking for myself, we are now in one of my favorite times of the year; namely time to file your taxes.  The IRS deadline is April 15th in the United States and in Canada it is April 30th.  It is very important to file something even if it is wrong because the penalties for not reporting can be severe. Please obey the laws on this and do not fall into the trap that some claim that taxes are illegal and you do not have to pay.

When I was growing up, my parents taught me that getting money back from the government was a good thing.  The very thought of having an extra cheque in April or May (depending on when you file your personal taxes) was never a bad idea. This was to be treated like an extra supply of cashflow. I now take an opposite point of view to what I was taught.

A tax refund means you paid them too much over the period of a year and they are simply refunding your money from over contributions. You gave them your money at 0% interest and get your principal back. I have worked at numerous publicly traded companies and they go to great lengths to calculate the exact amount they owe. Do not underpay your taxes either because then the tax authorities will request their fair share.