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IT’S OK TO OVERPAY THE IRS (BY A LITTLE) OVER THE COURSE OF A YEAR

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Most people will tell you that this is a bad financial decision. The IRS is earning interest on money
you could be earning interest on. And…I won’t disagree with them. You are probably now saying,
“Well then, why do you make this one of your principles?”
I’m recommending you overpay just a little (less than $3,000 annually) when you are in the first few
years of your career. My basic rationale is that it is forced savings. If you had that money during the
year, you probably would have blown it on some irrational expense that is now worth nothing to you.
Additionally, the $3,000 you are overpaying the IRS during that year is worth less than $50 in interest
loss. It’s not enough in your pocket to make you manage your IRS deductions that closely. However, it
is important to do so, if you’re overpaying the IRS by $10,000 a year.
Having received that $3,000 check at tax time many times in my life, I can tell you it felt good. Many
times, I put it in my investment account, and it ultimately resulted in much more than $50 in my pocket.

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