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Comment by rvnx | Hacker News Reader

(Not from the US) Why is it a good thing to lend for free to the US gov ? Because the regional banks aren’t that stable ?

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People like getting the big lump sum and some don't even realize it was their money all along that they just overpaid throughout the year. It's not a good thing for individuals to overpay.

Nah, because for people with poor financial skills, the ability to save is very difficult (even if they had the "Extra" money in their account each pay period instead of paying extra taxes). So even though you're technically getting your money "back", for some people they would not have been successful to 'save' so much without it being forced on them.

“Look! I filed my taxes and I got money back! Yay money!” (Could have had that money all along.)

The people that enjoy a tax refund would not really even notice the small amount they "could have had all along" by adjusting their withholding amounts.

It is not a good thing because it is interest free and inflation exists. If you would have had that money earlier you could have put it in high yield saving account or payed down debt.

It is not interest free. E.g., I was paid $480 in interest on overpayments last year.

It is interest free if the IRS pays you within N days of you filing. If they're slower, then they pay interest.

Where N is some value between like .... 30 and 90? I forget.

There are a number of different overpayment interest regimes[1]. Mine was paid based on time elapsed from the time of overpayment (overpaid quarterly estimated taxes).

[1]: https://www.irs.gov/payments/interest#pay

You pay tax on those overpayments.

But they only pay that if they don’t return it that year (for normal W-2 employees).

Yes, I got a 1099-INT from the IRS.

In some cases (depending on your tax situation) other forms of bonds (municipal/state) may be better because of how or if they get taxed.

I did not deliberately overpay as an investment strategy :-).

Last time I looked, you needed to be in a higher tax bracket than I was to make Muni bonds worth it, in part because my state (WA) does not have income tax. Something like the 35% bracket.

And anyway, my investment strategy is not long bonds at this point in my life.

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