Suze Orman: IRS Tax Refund Policy

In March of 2007, Suze Orman discussed the new IRS tax refund policy that small business owners need to consider for their own benefit and the benefit of their employees. For the first time in IRS tax history, states Orman in her Money Matters column, taxpayers on the receiving end of a federal tax refund will have the option of telling the IRS where to send their tax refund. Suze Orman informs taxpayers that they can instruct the IRS to send their federal tax refund via direct deposit into an existent account at any financial institution. A point that Suze Orman stresses in her Money Matters article is that taxpayers can now circumvent the temptation to spend their IRS tax refund right away by depositing it into an investment account or a retirement account.

Suze Orman reports that the IRS tax refund policy allows the taxpayer to direct their federal tax refund into up to three different accounts at three different financial institutions. Suze Orman strongly encourages taxpayers to take advantage of the offer by the IRS. In her Money Matters column, Suze Orman delivers the financial evidence to back her statement, beginning with the fact that in 2006 the average federal tax refund was $2,700. Orman goes on to suggest that by having the IRS deposit tax refunds money into a Roth IRA invested in a low-cost index fund or ETF, taxpayers can look to turn their tax refund into $29,000 based on an average annual return of 8% over 30 years.

Suze Orman’s pleasure with the new IRS tax refund policy is overshadowed by her view on tax refunds in general. In her Money Matters article, Orman says, “The fact is that tax refunds are a sign that you’re wasting money.”  Suze Orman’s position on the matter of tax refunds is clear; getting a tax refund means that a taxpayer is pouring money into the federal government’s coffers over the period of a year that they could have been using for their own gain. Suze Orman offers investment and retirement strategies for taxpayers and recommends that all taxpayers break the “refund habit.” Suze Orman’s bottom line is that taxpayers make 2007 the last year they receive a federal tax refund. For help with questions about Suze Orman, IRS tax refunds, retirement strategies or small business funding, please contact us.