Your 2016 tax refund may be delayed for a super-annoying reason – identity theft.
The IRS says a new anti-fraud policy might cause refunds to be held up for several weeks while the agency double checks the identify of early filers claiming the Earned Income Tax Credit and Additional Child Tax Credit.
Given the potential for delay, the IRS is encouraging taxpayers to adjust their 2016 payroll withholding to reduce the size of any possible refund. That’s something we should all do, regardless of the looming snafu. Getting a huge refund feels good, but it actually means you overpaid your taxes and allowed the government to borrow money from you interest-free for several months. Not. Good.
If you got a big refund for 2015 and your circumstances are largely unchanged, head over to payroll and fill out a new W-4 taking more allowances. The goal here is to match the amount of tax you pay with what you actually owe. As a result of the changes to your W-4, you will likely get a smaller refund but bring home more money every pay period.
This is a perfect example of why it’s important to conduct regular reviews of your financial life. Check everything from your bank statements to insurance policies to investment holdings to make sure any significant life changes have been addressed and everything is operating at peak efficiency.
Remember, no matter how many professionals you employ to help manage your affairs – financial planners, lawyers, tax guys – YOU are the CEO of your life.