Mike MilliganFounder and CEO, 1.oak Financial · Founder and CEO, 1.oak Financial

The SCARIEST Tax Trap That Hits Retirees 73+

31 Oct 2025 · 1 min

Watch on YouTube

0:58

In this brief segment of his YouTube video, Mike Milligan explains that many taxpayers unintentionally give the IRS an interest‑free loan each year through excessive tax withholding. He clarifies that a tax refund is not a bonus but a return of money that was over‑withheld throughout the year, citing the 2024 average refund of $2,815. Milligan attributes the problem to outdated W‑4 forms that don’t reflect current life circumstances and a “forced‑savings” mindset that treats the refund as a once‑a‑year windfall. He emphasizes that adjusting withholding could effectively increase each paycheck by roughly $125, eliminating the hidden cost of the loan to the government.

Chapters

Excessive tax withholding, the interest-free loan to Uncle Sam. You don't want to do that.
No, I mean, like, people, people don't understand, like, what a tax refund really is. Really means that you just giving your money early to the IRS and they're not giving you any interest on that money. The average tax refund in 2024 was $2,815. That meant that taxpayers gave the government that money as an interest-free loan all year. Imagine what that's— that's it. That's the equivalent. If you get paid every 2 weeks, that's the equivalent of about $125 more in your paycheck. So, so why, why does this happen? It's because people have outdated W-4 forms not reflecting their current life situations. It means they're over-withholding and, and they have this kind of, I'm going to save money. That's forced savings mentality. Sure. It's going to be give back to me once a year.