Typically, TV commercials in January and February are filled with ads depicting deliriously happy customers. In one ad, customers are dancing on a desk to a 90s party anthem. Why? Because they just learned they’ve “won” thousands of dollars. Another ad shows “contestants” coming on stage to claim their prize of thousands of dollars. And there are many more.

What do all these ads have in common? Potential financial mistakes! Why? They’re designed to grab your tax preparation business. But if you think about it, the approach insults our collective intelligence.

Somehow, these ads are equating a tax refund with winning the lottery. The tax preparation industry is estimated to be worth nearly $9 billion. So you can see why the ads are so aggressive. But depicting a tax refund as money “won” seems a little obscene. And in some cases, it’s simply not correct.

Last year the IRS refunded $318.5 billion. That’s an average of $2,913 per filed return. When $3,000 arrives in your checking account or mailbox, you may ask yourself, “Where did this money come from?” We often take these refunds for granted as we put our “quarter” into the IRS slot machine and hope it pays off.

Like the workings of a slot machine, we’re not so interested in how it works or how the money got there. As long as we go home with money in our pockets, we’re happy. Typically, if you have a tax refund it comes from at least one of two sources.

It comes from you or your neighbor.

Let’s start with your neighbor. Various tax credits can put money directly in your pocket. Credits are actual refundable dollars that may reduce — and in some cases eliminate — any tax you owe and refund to you anything beyond what you owe. These credits come to you simply by your circumstance. An example of a common tax credit is the Child Tax Credit. The Child Tax Credit gives you $1,000 per dependent child 16 or younger. So even if you weren't owed any taxes, you would get something back.

And where does that money come from? Although many get sizeable refunds, some receive no refund and actually owe money. A small business owner is a good example of one who may not receive a refund and likely will owe taxes. Other taxpayers, the government and business owners could be the source of your refund. It has to come from somewhere! You may say, “I’ll still take the money.”

But beware: That money may just be coming from you.

That’s right! All of the wonderful “lottery-esque” money may very well be money you inadvertently gave to the IRS as an interest-free loan. And the IRS had your money for up to a year. That’s money you could have been using. This happens if you’ve had too much money withheld during the year and overpaid taxes. This happens especially if you qualify for tax credits. But there’s a good way to manage it.

Adjust your withholdings to have an appropriate amount — if any— withheld from your paycheck. The perplexity in determining your withholdings on a W4 form adds to the confusion. Suffice it to say, the more “exemptions” you claim, the less is withheld from your paycheck. But unfortunately, the worksheet on the W4 form is obsolete and typically worthless. Instead, use an online W4 calculator to decide if you’re having the right amount withheld (the IRS offers a Withholding Calculator at

While we might smugly flaunt a large return and smirk at those who receive little or no refund, it should be the other way around. When done properly, a tax refund would be in positive territory (especially if you qualify for tax credits), but not an obscene amount that has you dancing on the desk of your tax preparer.

In fact, if you receive little or no refund, don’t worry! It means you planned your taxes just about right. You used your money toward your goals rather than loaning it to the IRS and then blowing it at tax-refund time. Hmm … on second thought, go ahead and dance on the table.

Shane Stewart is a Certified Financial Planner(R) at Deseret Mutual. He welcomes your feedback. Or you’re welcome to suggest a topic. Please send your comments to [email protected].