This is the Ramsey Call of the Day, part of the Ramsey Network. Joining me today is Ramsey Personality, Rachel Cruz. Y'all found out that there's labor shortages out there, right? Y'all found out that there's disruption in supply chains, right?
Y'all found out that the IRS went completely bonkers and just quit working all together during the pandemic, like for two years, right? So here's the deal. Weird tax seasons for the last couple of years you bet. The IRS at this moment is sitting on 20 million tax returns that are unprocessed.
So you're used to file your taxes and, you know, like a couple of days later, you would get a refund. Some of you have been waiting on a refund for as much as ten months now. Yeah. So your little refund program's not working for you, which brings us to the subject that refunds are not free money.
They're not a gift from Washington, D.C. I know Santa Claus personally, I'm old. He does not live in D.C. He lives in the North Pole.
You're not getting a gift from your government when you get a refund. But it is you have paid in too much. And there's a lot of money going in, Rachel. A lot.
Well, 75% of taxpayers got a refund on average of $2,800. So yeah, when you get almost a $3,000 check in the mail, it's like, ooh, that's fun. Like, you know what I mean? Like, there's obviously a reaction that happens.
But the important thing there is remembering, like, that's your money that could have been $3,000 over the course of a year to be paying off debt or to save or to use it to give or to spend even on what you want. Like, it would be used for your life. And instead, yeah. I'm going to channel my inner John Deloney.
Whoa. Are you going to be therapist day right now? No, we need to reframe this. That's what it looks like.
Oh, wow. Let's pick our unit. I need to reframe your way of looking at this. You need to reframe the approach you're taking to this.
So when you open the next time, because of listening to this piece of radio right now, this piece of this podcast right now, the next time you open your mailbox and there's a refund, I don't want you to go, whoo-hoo. I want you to go, God, I'm stupid. That is not John Deloney. No, reframing it is John Deloney.
I know. And then you went, right. God, I'm stupid. No, you are not stupid.
Yes, you are. What you did was stupid. Okay. Oh, my gosh.
So not really 75% of the people listening to the tax refund, which means you paid too much in taxes without any interest. They send it back to you when they decide to finally go back to work and then you act like Santa Claus sent you the money. No. That's not where it came from.
So tax refund bad, not good. Okay. Here's a question. Obviously the ideal is to get to zero is where you don't owe any and you're okay.
Correct. But getting to that exact zero can be difficult, right? Especially the last year we've had people are taken on. It's just everything's a bit wonky still.
Would you rather someone owe a little bit and have money and savings that they pay or would you rather a tax refund happen? Well, I mean, I want to get it down in the $100 range one way or the other. And it's difficult. That's it.
It requires a little effort. But the first step of that effort is to reframe the argument and go tax refund stupid, not good. Okay. So now once we get that reframing done, I've loaned the government money and they paid me no interest.
And then they gave it back to me when by God they decide to finally come back to work. And so, you know, so and 75% of you got $3,000, that's $250 a month. And you have a tight budget and you're whining about gas prices and you're worried about the cream cheese at Publix, right, Rachel? Hey, that fourth pig resonated.
That's all I got to say. Fourth pig was popular. I got to say, you're a nerd with the fourth pig. It's a real pig.
The drama pig. No, let's don't get off track. Let's stay on focus. We talked about that a while ago.
So $2,800 a month too much coming to your taxes. How do you adjust for that? There's two ways to do it. One is the simplest, easy way is if nothing has changed in your life, you're still in the same tax bracket.
You haven't had a baby. You didn't start as bad as well. Something's not different from last year. Then just adjust your withholding by $250 a month because you're probably getting exactly the same thing back.
So just adjust it by that amount. Just going to payroll and go, I get $250 a month. If you're average with $20,800 a month. If you've got a $3,000 refund, that's $250 a month.
If you've got a $4,800 refund, that'd be $400 a month. Adjust it to where you get no refund. Now if something's changed, then what you do is you jump in and just do a tax return and act like what's going on. And then you can predict what your taxes are and then make sure that amount is being withheld.
Check out one of our endorsed local providers and they can help you with this. We've got Ramsey Trusted Tax Pros. If you have a complicated return and of course you also can get Ramsey Smart Tax. And if you're a Ramsey Plus member, Ramsey Smart Tax, online filing is free.
So you can actually run through the scenario and figure out what it is you're going to owe. You go, okay, I owe, I don't know, make up a number. $12,000. That's $1,000 a month.
It should be coming out of your check, not $1,250. And so your goal is to zero this out and don't end up owing more than has been withheld. It's not that you owe taxes because you already did owe taxes. They just took out.
So when you come up, when you come up short and you're going to have to write a check at tax time, that doesn't mean you owe taxes. You already owed taxes. You get taxes. You just owe a little bit more taxes that you haven't yet paid.
That's all it is, okay? Isn't that owing taxes? No, huh? Isn't that owing?
It's not. You already owe the taxes. Yeah. That hasn't changed.
Sure. It's just the fact you under withheld and so you have to pay a little bit more. That's right. That's right.
That's right. So you owe $12,000 and you only send in $11,950. So when you pay $50, it's not I owe $50 in taxes. No.
You've just underpaid your taxes by your $12,000 in taxes by $50. Yes. So don't get confused. That's the outcome of all times from a standpoint of basically conning the public was when they passed the law that allowed taxes to be withheld from your paycheck.
So the taxes come out before you ever see it. If people actually had to write a check or go down with cash to a location and take the money in $100 bills every week to the tax collector at a location, there would be a revolution in America because people would realize how much of their freaking taxes are. And the tax collector would be looked at as a scumburger like he was in biblical times. The fact that it just comes out of your check and you never see it, it's lulled the sheeple to sleep and the sheeple all just pay taxes out there freaking ears and nobody raises a flag and goes, you people are buying $250,000 toilet seats with this money.
You're taking out of my check up there. You guys are a bunch of out on the misfit toys. You need to stop it. But if you actually had to go pay $100 bills or change everything.
Yeah, that's a great point. So go to RamseySolutions.com and get Ramsey Smart Tax. It's an online filing. It'll make it easier for you.
Less painful. And if you really have got a complicated return, like you've got the side hustle, you've picked up some other deductions and you don't know what to do with them. It's worth the money to get a pro on your side to help you go to Ramsey Trusted Pro at RamseySolutions.com. One of our tax ELPs.
But address the issue, pay attention and reframe the argument, which will open the envelope. Don't go, tax me fun. Good. Go tax me fun.
Stupid. You need to reframe that in your head and not act like a celebration is happening here. Instead it should be an act of shame and guilt and condemnation. I'm kidding.
But I'm kidding. Right? You're so sensitive. No.
Don't put me in that camp. I'm a realist is what I am. Well, I just want you to walk in from the mailbox with your head down instead of dancing. No, I agree.
I'm there. Thanks for tuning in to the Ramsey Call of the Day. To check out all of our podcasts, just search Ramsey Network on Apple Podcast, Spotify or wherever you listen.