Catfish!

As we begin February, I have two things on my mind, tax season and catfish. Yeah, it’s weird to me too. For 29 years of my life, catfish meant bring light bread, mustard, hot sauce, pickles, spaghetti and your wallet because if you weren’t at a family function, you were probably at a fundraiser. So you can imagine my astonishment when I found out that there is a documentary and tv series about catfish that didn’t involve a deep fryer. For those who don’t know what I am talking about, a “Catfish” is a person who pretends to be someone else on social media with the intention of getting other people to fall in love with them. This activity is so prevalent in our society that two guys made a documentary about it and MTV created a spinoff television series. The “lifestyle” hit mainstream last week when it was reported that the assumed deceased girlfriend of Notre Dame star football player Manti Te’o never really existed. That’s heavy! People fall victim to Catfish schemes because they allow their vulnerabilities to affect their grasp on real life. So, to make sure you have a firm grip, I am going to dispel arguably the longest running Catfish scheme known to youth of lower and middle class families. Your parents’ income tax check isn’t really what you think it is!

When I was a child, I thought that income tax checks were like awards for being American. In reality, a tax refund isn’t a gift, a bonus or a guarantee. It is the result of an overpayment on a federal tax bill. Every time a person gets paid, the government deducts a certain amount from their paycheck in which it uses to help fund the operations of the federal government. At the beginning of each year, they are required to report their income and certain details about their personal lives to the Internal Revenue Service (IRS). The IRS uses this information to determine their tax liability for the previous year. If it is determined that the amount withdrawn from their paycheck was more than their tax liability, they are awarded a tax refund. It’s like giving a cashier $60 to pay for a pair of $50 heels. The cashier will give you $10 in change. The $10 is equivalent to your tax refund.

Typically, the more money you make, the less likely you are to get a tax refund and this is where things get deceptive. Although I haven’t done an official survey, I think most people would prefer an extra lump sum of money every year. I also think that most people would prefer an increase in salary every year. However, in regards to income tax refunds, it is rare to get both consistently. So which is better? It is best to have your money during the year as opposed to a refund later. From the perspective of common sense, I am more comfortable holding my own money as opposed to allowing someone else to hold it.

From the perspective of financial discernment, money earned during the year can immediately be used as an investment to earn more money. This is an example of the time value of money. If you wait a year, you forfeit the potential to earn interest on your money. So regardless of the perspective, it is best to have your money during the year. Unfortunately, too many people have an impoverished mentality and share my childhood perception of tax refunds, valuing that one time a year where they strike gold, green or both. These are the people looking for happiness in all the wrong places. Thank goodness I matured and stopped dating online.

C.Hale