The reason why I like paying later is because i have control over the money. I can invest it, keep it safe, and keep it liquid to me if I ever needed to use it. By letting Uncle Sam have it first, who’s being a better steward of your money?

We’ve all heard the saying that a dollar today is better than a dollar tomorrow. Use that discipline that you use when you pay taxes early to Uncle Sam. Instead of paying it to him, put it into a interest earning account that’s safe and liquid. Then pay him at the end.

Daniel, if you had an extra $400 per month, you could pay it towards your car or you student loans! In fact, because you’d be paying down the principal each month more than you would with your regular payment, you even wipe out some of the capitalized interest you otherwise paid with your large payment using your refund! That actually pays your car off EARLIER, and with a lower total principal+interest than you ended up paying.

Daniel’s attitude also is indicative of the nanny-state mentality, which I abhor, that says, “Please, Almighty Government, save my money for me because I am so weak and helpless that I cannot save it myself.” Daniel, you’re smart enough to get on a blog like this and comment, so why can’t you do a little better for yourself>

Generally, I think it is over-argued that you could save the extra monthly gross income. People counter, “but I would spend that all anyway.” I say congratulations! Spend it! Spend that extra $400 a month to buy your expensive gas, your vacation, your shopping spree, etc. instead of borrow money on credit cards to do it! Spend the money you have NOW instead of spending someone else’s money (Visa/MC) and then paying them back at the end of the tax year.

However, I think the bigger problem with receiving a big refund from your taxes isn’t the interest that you give away to the government, but the fact that many people could have used the extra money throughout the year rather than getting it in a lump sum in April.

I think people would be more tempted to use that lump sum on something they don’t need rather than if they received the extra $50 to $200 per month in their paycheck.

But, no one’s perfect, no one saves as much as they should. If I wasn’t paying as much into taxes, that money would be in my check, and I would put my allotted payments into savings, but the extra money from paying fewer taxes would go into my main checking account, and would be spent. As I am sure is the case with most people here.

However, I AT LEAST two thirds of my tax return into my savings or IRA when I get it. The other third went to a new pair of glasses, so even though it was spent, it was spent on a necessity.

Psychologically, it’s a lot easier for people to put a large sum of money into savings, rather than spending that extra $50 a month.

And, as Ramit said, $600 in an ING account would be $1.50 a month, that’s $18 a year. Waiting a year to put it in savings is not going to make that big of a difference.

Finally, I’ve been on the other side of the coin, I’ve had to pay, and it too me a couple months to recover from that. So I’d rather let the Government earn a little cash to be on the safe side.