Refund Psychology

If you are one of the (un)fortunate employees that are entitled to a federal tax refund, then it probably means you are right at the cusp of "uber-wealthy" and there is always next year for your Swiss bank account. However, for those of us that hastily prepare and file our 1040s in anticipation of getting a sizable check, we should take a moment to consider what is going on here.

Let's make this as simple as possible. Here goes. You sell your soul to the devil in the name of a paycheck. By the time you see the direct deposit in your magically shrinking checking account everyone and their mother has stuck their hands into your loot to claim a portion of your pretax salary. That means Uncle Sam on EVERY level inserts his, err...takes his portion, your insurance company, your public transit provider, etc. By the time it is electronically deposited into Chase you notice that those entitled to your money before you were kind enough to leave you with enough to cover your rent, afford the utilities bill that's three months overdue and a few paltry happy hours to cope with the aforementioned deal with the devil.

Then when you've finally arrived at that place that every abused Catholic boy has faced, when he listens to his chapped ass and realizes he physically can't take anymore, you check the mail anticipating bills that you can't afford. You insert the key three quarters of the way into the box, because by now you've realized that the key doesn't fit perfectly and it requires finagling to turn the locking mechanism. Exhausted, you flip through the countless credit card offers, Time Warner cable bundled discounts, and fumble upon an envelop from the federal government. You open the check that you had spent months ago and realize that life is just barely bearable because you finally got something back (after giving so much).

WRONG! You got your own money back. That was the money that you overpaid to the federal government, or excuse me, the money that was withheld in excess of your tax liability. At that moment, I [S.A.] realize that I and every other recipient of a refund have acted like a gigantic bank for the federal government. It's all very complex and involves the time value of money, but the bottom line is that the government was holding your money and chose to return a portion of it at a time that was convenient for them. Next time you're on your refund shopping spree, remember that it's nothing extra or special, but rather money that rightfully belongs to you. Forget it. What am I talking about? Steve Jobs would love to have you spend your refund check on another gadget.