My accountant told me my 'tax savings' were actually just bad bookkeeping

I mean, I was putting about 30% of every check into a separate account and calling it my tax fund, but she looked at my stuff from last year and said I was basically just hiding money from myself and missing out on using it. She showed me how to set up a real quarterly payment plan with the IRS instead, which freed up a bunch of cash for my emergency fund. Has anyone else had a pro point out a basic money habit that was actually holding you back?

3 comments

3 Comments

the_julia12d ago

That's such a classic move, putting money in a fake "tax" account just to feel safe. My old system was similar, I'd over-withhold like crazy on my W-4 to force a big refund. A planner finally asked why I was giving the government an interest-free loan every year instead of putting that extra hundred per check into my own savings account where it could actually do something.

hernandez.gavin12d ago

Feel that. I used to treat my tax refund like a surprise bonus instead of my own money.

henry_anderson5412d ago

Remember when I thought my "tax fund" was genius, turns out I'm just bad at math.