A tax refund isn’t free money. It’s also not a good indication of whether you paid more or less in taxes compared to the year prior: income, life events, financial circumstances—even tax law—can change at any time and can materially impact your tax situation for the year. Regardless of the reason for a large tax refund, the outcome is the same: you gifted a free loan to the government when you could have put the cash to work for yourself. If you wouldn’t give a good friend a four or five-figure interest-free loan, why would you give one to the IRS?

After the Tax Cuts and Jobs Act passed at the end of 2017, many taxpayers were expecting a sizable refund come April 2019. But that isn’t what happened: the overall number of refunds issued was largely flat while the average refund decreased -1.4% from 2017 to 2018.

So what happened? Was the promise of tax cuts a farce? Actually, no.

The Tax Policy Center estimated that 80% of Americans pay less tax following the Tax Cuts and Jobs Act and only 5% will pay more. Many taxpayers did end up paying less tax, but they did so with each paycheck, thanks to changes in the IRS withholding tables that were intended to better reflect each taxpayer’s expected tax liability. Once returns were filed, refunds were generally smaller, meaning fewer individuals were overpaying the IRS throughout the year.

Changing the narrative on tax refunds

Relying on an annual tax refund can put you in a precarious financial situation. Not having enough liquid savings to meet unforeseeable expenses could force you to turn to high-cost debt to bridge the gap. Overpaying your tax liability throughout the year also means missing out on opportunities to potentially grow your assets—whether interest earned on a high-yield savings account or compounded growth in an investment account. Rather than let the IRS dictate your monthly cash flows, take control of your own financial future.

Using the IRS’ tax withholding estimator, calculate your expected tax liability for the year to ensure your current withholding is adequate without grossly overpaying. Rather than set annual saving and spending goals around a tax refund, allocate your net paycheck each month to your objectives. You’ll have a better sense of where you stand financially and you’ll avoid the temptation to spend a large Ôwindfall’ in April.

Better ways to assess your yearly tax situation

If you’re too focused on your tax refund you may overlook important information about your tax situation for the year, including planning opportunities to help reduce tax in future years. Rather than keying in on the delta to your true tax liability, your effective tax rate, marginal tax bracket, and total tax liability can tell a better story about your tax situation.

Your effective tax rate is calculated by dividing your total tax due (line 16 of the 1040) by your taxable income (line 11b of the 1040). Your effective tax rate is essentially your average marginal tax bracket, which is a helpful metric when comparing your tax situation year-over-year. It’s also useful to know your effective tax rate if you need a quick back-of-the-envelope way to quantify the benefits of reducing your taxable income with pre-tax benefits, such as a 401(k) or flexible spending account (FSA).

Your marginal tax bracket can also shed light on your tax situation and help guide tax planning opportunities. The higher your tax bracket, the more valuable tax deductions and tax efficiencies become. When you complete your taxes for the year, consider how you expect your income and deductions to change this year compared to last.

Depending on your life stage and financial situation, it may be advantageous to consider what tax planning opportunities may be available to you this calendar year. All too often taxpayers are so ready to move on after tax season that they fail to take advantage tax reduction strategies for this year while their tax situation is still fresh in their mind and there’s plenty of time left before the end of the year.

For employees, some strategies may include bunching deductions, asset location, donating appreciated securities, and maxing out pre-tax contributions to retirement accounts. For self-employed entrepreneurs or business owners with employees, consider starting a retirement plan if you don’t already have one.

Surprise bills aren’t fun for anyone, but you likely don’t need to overpay your tax liability to avoid one, especially if all your income is through W-2 wages. Although it may require some calculations by you or your CPA to ensure your withholding is accurate, planning is the only way to regain control over your tax situation and identify strategies to potentially help reduce your taxable income in the future.

This article was written by Darrow Advisor Kristin McKenna, CFP® and originally appeared on Forbes.

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