Taxes and lost $$

Last week Jen and I completed our 2006 taxes. For the record, I always use TaxCut because I really like the interface and it does a nice job handling special situations (like when we had dual residency in CA and CO). I originally used TurboTax, but it got the boot quite a few years back 'cause I once got two different results from the same data (I think it was using AMT on one calculation and not on the other). Anyway, as any normal human, I do not like the process of doing taxes. I try my hardest to maintain a folder of tax related activities through the year...but it always ends up taking me a few evenings and fetching lots of paperwork in between to get'r done. The interesting thing (or maybe not) is that I love completing my taxes. Not because I typically get a refund...but because you always have a much better understanding of your financial situation coming out from completing your taxes.

So this year I completed our taxes and we did in fact get a large refund this year (about $15K). The driving factor behind the big refund is simple, I still have my W-4 deductions set to my bachelor days. Now this is quite obviously a waste of potential money, seeing as I let the government keep about $1250 per month of my money thus I lost out on all the interest. Assuming I had placed this $1250 per month into a MMA acount making 5% interest, I figure I just lost out on ~$350 (a free 2.3%) ... ok, so now I am sure Jen is a little upset with me! Here is the table I used to calculate the loss:

Now one thing to point out here...one must be disciplined enough to actually save all $1250 per month and put it into the MMA. If you don't and instead spent anything more than ~$350 then you are break even or even lower. In the end, is $350 a huge price to pay for a "zero interest savings account"? OF COURSE IT IS! Instead, this year I plan to change my deductions and direct deposit the extra money into a separate high interest savings account like AmTrust Direct which earns 5.36% (just don't go over the 6 transfers per month or the fees will get you)!