Overview of No More Tax-Free Loans!
This episode of DIY Money (hosts Quint Tatro & Daniel Czulno, CFP® — with CPA Allie joining) answers a listener question about how to stop giving the government an interest‑free loan by getting a large tax refund every year. The hosts explain the difference between adjusting employer withholding (W-4) and making quarterly estimated payments for self‑employment income, outline the goal of “breaking even” on taxes, and recommend practical steps and timing for tax planning.
Main topics covered
- Listener question from Christy (Nebraska): she and her husband keep getting large refunds and want to stop overpaying taxes.
- Difference between W-2 employee withholding and self‑employed/quarterly estimated tax payments.
- Timing: the value of year‑end tax planning (Oct–Nov) and mid‑year adjustments.
- Practical advice: adjust your W-4 for wage withholding; use a CPA to estimate and adjust quarterly payments for business income.
- A short personal banter about camping and the hosts’ “miserable = memorable” motto.
- Sponsors and show logistics (1-800-Flowers, Progressive, etc.) and the $25 Amazon gift‑card incentive for callers used on the show.
Key takeaways
- Aim to “break even” on your tax liability: avoid both a large refund and a large tax bill (and potential penalties).
- W-2 employees should adjust withholding with their employer by updating the W-4.
- Note: changing withholding can take a few payroll cycles; adding extra withholding is often easier than reducing it abruptly.
- Self‑employed taxpayers must estimate income and make quarterly estimated tax payments; this requires revisiting estimates as income fluctuates.
- Do tax planning before year‑end and do mid‑year check‑ins if your income changes significantly.
- If you repeatedly get large refunds while running a business, it may indicate the business isn’t profitable — review the business finances.
Actionable checklist (what to do next)
- Review last year’s tax return to see your actual tax liability.
- If you’re W-2 only:
- Complete a new W-4 with your employer to fine‑tune withholding.
- Consider adding a small extra withholding if you want a buffer.
- If you or your spouse has business income:
- Work with a CPA or tax pro to estimate annual taxable income.
- Make or adjust quarterly estimated tax payments based on those estimates.
- Do a mid‑year check (or sooner) if income changes materially — update estimates/withholding.
- Schedule a year‑end tax planning session (October–November) to avoid surprises.
- If large refunds persist, evaluate the business’ profitability and tax strategy with your advisor.
- Avoid underpaying: underpayment can trigger penalties and interest from the IRS.
Notable quotes and lines
- “You’re getting back your own money — it’s not a gift. You’ve given the government a free loan.” — point emphasized by the hosts.
- “The goal is to break even.” — succinct summary of the episode’s tax goal.
- “The secret to wealth is pretty simple. Live on less than you make, invest the rest and do so for a very long time.” — show sign‑off.
Practical warnings
- Underpaying taxes can lead to penalties and interest; don’t try to game the system by aiming to owe a small amount.
- Make adjustments gradually and consult a CPA if you have variable business income.
Episode logistics / extras
- Question credit: Christy from Nebraska — she’ll receive a $25 Amazon gift card for being aired.
- Hosts: Quint Tatro & Daniel Czulno, CFP® (with Allie — CPA and frequent co‑host).
- Sponsors mentioned: 1-800-Flowers, Progressive, Paragold, State Street (DIA), Walgreens, Capella University.
If you want a similar walkthrough for your situation, gather last year’s tax return, year‑to‑date income records, and an estimate of expected income for the rest of the year before meeting with a CPA.