Unhappy with Your Tax Refund?
Taxpayers are often unhappy with the size of their tax refund, believing it should be bigger. Sometimes the taxpayers are right and they are entitled to a bigger refund, and sometimes it’s just wishful thinking.
This disappointment with the size of their refund can be due to 4 factors:
- Taxpayers not understanding the tax system and having unrealistic expectations. For example, taxpayers who have paid no tax during the year, expecting a tax refund when lodging their return.
- Accountants omitting legitimate tax deductions. This can be due to a lack of knowledge, carelessness, or just human error.
- Taxpayers needing a specific dollar refund for a budget commitment they have made. For example, taxpayers booking a holiday to Bali in June, and needing a $1,000 tax refund in July, to cover the flights and accommodation.
- Taxpayers incurring tax deductions, but failing to keep the required substantiation and records. This results in less deductions, and smaller refunds.
The solution to this problem is communication, client education and the practitioner reviewing their work.