Assume a taxpayer projects that his total income tax for the year will $25,000.A taxpayer with savings should prefer to structure his tax prepayments so that he will receive a tax refund of $2,500 rather than a tax due of $2,500.

Question

Quizplus · Accepted Answer

Receiving a tax refund means the taxpayer overpaid during the year, effectively giving the government an interest-free loan. It's generally better to owe a small amount, as the taxpayer can use the money throughout the year for savings or investments.

Assume a Taxpayer Projects That His Total Income Tax for the Year