You Deserve Your Tax Refund Today
It takes 2 days (T+2) to settle stocks so Robinhood is trying to fix that. It takes 24 hours to settle a wire transfer and crypto is trying to fix that. It takes shocking 14+ months (T+14M) to settle your income tax bill and nobody is trying to fix this..yet. In the US, It takes roughly 14 months from the day you first pay your taxes to the day you can file your taxes and get back any excess taxes paid as a tax refund. We co-founded Column Tax to fix this and make income tax settlements close to real-time.
To deeply understand the severity (and the business opportunity) of this 14-month settlement delay, you should know how tax refunds actually work. For most people, a tax refund is the “free money” received from the government. This is only partially true.
Actual cash tax payments you made throughout the year “Payroll withholdings” is the technical term for this. When you start a job, you fill out a Form W-4. Based on the input of this form, your employer takes out a certain amount of taxes from each paycheck and sends it to the government. The exact amount taken out from each paycheck for taxes is set by the IRS withholding tables that employers are required to follow. These tables are conservative by design so you end up allocating more taxes than needed leading to a lower take-home pay.
