Is Bigger Better? When It Comes to Tax Refunds… Absolutely Not.

Let’s talk about the obsession with huge tax refunds. Every year, people brag about getting five, eight, even ten thousand dollars back like they hit the lottery. But here’s the uncomfortable truth: that big refund doesn’t mean you “won” tax season. It usually means you gave the IRS a tax-free loan with your own money all year long—and they’re just now giving it back with zero interest. Bigger is not better if it means you’ve been starved for your own cash while the government babysits it.

Think about it this way: if a friend “held” $500 of your money every month and then proudly handed you back $6,000 next April with no interest, you would not be posting them as #goals. You could’ve used that money for debt payoff, investing, bills, savings, or, I don’t know, not living on vibes and overdraft fees. A large refund is basically proof that your withholding or estimated payments are too high, and the IRS has been enjoying your Big Refund Energy all year instead of you.

So how do you avoid the “bigger is better” trap? If you’re a W-2 employee, it starts with your W-4. That little form you filled out when you started your job (and probably never looked at again) controls how much tax comes out of your paycheck. If you’re consistently getting big refunds, you can update your W-4 so less tax is withheld. That means more money in each paycheck and a smaller refund at tax time. The goal isn’t to owe a ton; it’s to land as close to break-even as possible without surprise drama.

If you’re self-employed, getting monster refunds usually means your estimated tax payments are too high or your income dropped and your payments didn’t keep up. That’s where tax planning comes in. Checking in mid-year (or at least before year-end) to estimate your tax liability lets you adjust payments so you’re not massively overpaying. You still want to stay in the “safe harbor” zone so you don’t get penalized—but there’s a big difference between paying enough and paying way too much.

At the end of the day, a reasonable refund is fine. Some people like a little buffer, and that’s okay. But stop letting the IRS be your forced savings account when you could be using that money all year long. Bigger is not better if it keeps you broke in the name of a flashy April payout. Want help shrinking that refund and growing your actual cash flow? That’s literally what I do—before the IRS enjoys another year of your money more than you do.