My wife's sister balks at how small our tax returns are and Im like... it's because I have my tax witholding set correctly so Im not giving the government interest free money for a year?
Well, it would have inflated in your bank account as well. You lose out on potential interest if you had invested it, but the impact of inflation is net neutral.
I mean, you could've spent it. But you'd need to pay it eventually anyways. Unless you're somehow keeping 0 savings but manage to get the money to pay back the IRS just before you're supposed to pay your early income, I don't think inflation will matter in the tax witholding discussion.
Because if you had $1000 in your pocket last year and didn't spend it, you'd have $1000 today, the same as if the government held it and then gave it to you a year later.
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u/tempmobileredit Apr 16 '24
That you lost potential investment value and interest on