Forced Savings Weren’t as Useful This Year

by Chris McGinty of

It’s interesting to me how many
people are upset that their tax returns aren’t as big as they have generally
been. I’m not really here to point out the obvious, which is the reason you
generally get tax returns is that you paid too much of your own money in
withholdings. You’re getting back the money that was actually yours to begin
with. That is an important point, but the more important point is that
withholdings is not a savings account.
There is an odd phrase that
floats around financial circles, which is “forced savings.” The idea is that
because the government held out too much from your paycheck that you ended up
with a nice bit of savings that you can use for a bigger purchase that you
wouldn’t have been able to afford normally. Think about that for a second,
because people actually say this like it’s a good thing.
The money is there either way,
but if I get it throughout the year I’ll spend it and won’t get to make the big
And that’s why people are mad.
They were expecting to make bigger purchases, but then it turned out that their
withholdings were closer to correct than normal, which means that their only
form of savings isn’t there.
There are so many directions that
I could go with that, but I think I’m just going to leave it as an open ended
thought for now.
Chris McGinty is a blogger who
owes the IRS this year, because he wasn’t technically an employee of Uber, even
though every other aspect of the job works that way.

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