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Your strategy on taxes/tax returns?


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  #1  
February 21st, 2011, 08:26 AM
pattyandthemoos's Avatar Administrator
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So there was a thread on my DDC about how much of a refund you'll be getting. I never get these humongo refunds because we don't withhold that much so we don't usually get big refunds. My goal is to not have to PAY taxes but I don't live for a refund. I prefer to have my money throughout the year and don't consider Uncle Sam a good investment strategy or savings plan.

Am I the only one that feels this way?
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  #2  
February 21st, 2011, 08:49 AM
~Jess~'s Avatar Platinum Supermommy
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Nope, I'm with you. We actually need that money to live on each month. When we do have extra money, I'm really good about setting it aside in savings.

That said, I do realize that some people do not have the discipline to save extra money each month when they have it, and therefore view a tax refund as sort of a "forced savings." I think it's great that they recognize their inability to save on a monthly basis and opt for the tax refund route.

So much depends on your own personality and financial goals. As long as each person realizes that they have the option of receiving it monthly vs. receiving it yearly, then to each their own. Some people truly don't realize that that refund is taking money out of their monthly paycheck though, and I think it should be pointed out that they do have a choice.
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  #3  
February 21st, 2011, 09:14 AM
gctattoo's Avatar Mega Super Mommy
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Of course people realize that some of the refund money could be distributed throughout the year. Just because they're poor or bad with money doesn't mean they're completely stupid.

What no one bothers to point out is that refunds can also consist of earned income credit, the making work pay bonus, and child tax credits, etc. I'd get a decent refund regardless of how much they withheld.

I honestly don't care that I'm giving the government an "interest free loan." Big deal. I think militant anti-government types are the only ones who would care.

A big refund is an easy way to bolster an emergency fund. Or even buy something that's a luxury if they so choose.

I think not getting a refund can be financially detrimental to some. I would never encourage someone to get that whopping $20 more per paycheck and then have a car payment if they needed a vehicle. They could just make do until the refund came and pay with cash. It saves a lot of money in the long run and is a better financial decision. I suspect that anti-refund propaganda is a ploy to keep people in debt when they really don't need to be.
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  #4  
February 21st, 2011, 09:59 AM
pattyandthemoos's Avatar Administrator
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Quote:
Originally Posted by gctattoo View Post
Of course people realize that some of the refund money could be distributed throughout the year. Just because they're poor or bad with money doesn't mean they're completely stupid.

What no one bothers to point out is that refunds can also consist of earned income credit, the making work pay bonus, and child tax credits, etc. I'd get a decent refund regardless of how much they withheld.

I honestly don't care that I'm giving the government an "interest free loan." Big deal. I think militant anti-government types are the only ones who would care.

A big refund is an easy way to bolster an emergency fund. Or even buy something that's a luxury if they so choose.

I think not getting a refund can be financially detrimental to some. I would never encourage someone to get that whopping $20 more per paycheck and then have a car payment if they needed a vehicle. They could just make do until the refund came and pay with cash. It saves a lot of money in the long run and is a better financial decision. I suspect that anti-refund propaganda is a ploy to keep people in debt when they really don't need to be.
I do realize that a lot of people are getting earned income credit and things like this but I also see people that claim 0 for dependents and have 4-5 kids. I didn't used to feel the same way about this. I remember that I used to have them take out an extra $50 a week from my taxes to ensure getting a good refund at the end of the year. Now, I do something similar but instead of giving the IRS my money to save, I put it into a savings account that I can tap into midyear should I need it.

I am also not an anti-government person as far as lending money to Uncle Sam. For me, its not about giving them an interest free loan, but more about me keeping my money throughout the year. I like having the extra money to live off of. Plus, I might not make a ton of interest off of it but at least I have that choice.

I think it's just different strokes for different folks. I prefer my money now, some people prefer to have it later.
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  #5  
February 21st, 2011, 10:31 AM
youngwoman's Avatar Platinum Supermommy
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We had a year or two where we owed money because one of our jobs (can't remember which one) didn't take enough money out for taxes. So, it screwed us come tax time and we owed $3K. Ever since, we claim 0 and happily accept our refund! We do alright month-to-month, so then we set aside tax refund money for Christmas, a vacation, or some household project/splurge (or a combo of those). Works for us!
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  #6  
February 21st, 2011, 12:18 PM
~Jess~'s Avatar Platinum Supermommy
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Teri, I don't know if your post was to me or Patty, but how often is it just an extra $20 a paycheck? $20 per paycheck isn't going to get anyone a huge refund. Even someone paid weekly would only get a refund of a little over $1000 at that rate. When you see people excited that they're getting back $12000 though, I can't help but think "****, you realize that's $1000 a month you could've had in your paycheck, right?"

It used to be that one could have the earned income tax credit added to one's paycheck rather than getting a refund each year, but that was done away with in 2010, so some of those refunds (like you mentioned Teri), wouldn't be in the paycheck anyway, but still...

We actually went exempt all year last year (had zero taxes taken out) and are still getting a refund (albeit a small one), so I totally get it, but like I said earlier, we need it monthly just to keep our lights on and gas in the cars. This ****** economy is killing me, (well that and medical bills, but that's a whole nother story, lol).
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  #7  
February 21st, 2011, 01:05 PM
Fluffy Baby's Avatar Platinum Supermommy
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Quote:
Originally Posted by ~Jess~ View Post
Teri, I don't know if your post was to me or Patty, but how often is it just an extra $20 a paycheck? $20 per paycheck isn't going to get anyone a huge refund. Even someone paid weekly would only get a refund of a little over $1000 at that rate. When you see people excited that they're getting back $12000 though, I can't help but think "****, you realize that's $1000 a month you could've had in your paycheck, right?"

It used to be that one could have the earned income tax credit added to one's paycheck rather than getting a refund each year, but that was done away with in 2010, so some of those refunds (like you mentioned Teri), wouldn't be in the paycheck anyway, but still...

We actually went exempt all year last year (had zero taxes taken out) and are still getting a refund (albeit a small one), so I totally get it, but like I said earlier, we need it monthly just to keep our lights on and gas in the cars. This ****** economy is killing me, (well that and medical bills, but that's a whole nother story, lol).

I am lurking. But I wanted to comment. That 12K more than likely did not come out of their checks through out the year. For example, our tax refund was 9,000. Most of that was credits and deductions. Only about 1200 of it was from our taxes paid in by DHs job. We claim 0. I suck at saving and it is nice to have money come in after a hard year.
I realize that we could get it through the year (I bet most people know that). We do fine living, that extra few bucks a month is not going to really help.
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  #8  
February 21st, 2011, 01:20 PM
gctattoo's Avatar Mega Super Mommy
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My post wasn't directed at anyone on the board. It was a general rant against people in the past who have had the tendency to hit people over the head with this issue. Basically I'm of the mind that it's a personal choice. And I don't think that people really care about the interest free loan scenario that is the usual battering ram.
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  #9  
February 21st, 2011, 02:00 PM
mommy2Breana+Brandon's Avatar Platinum Supermommy
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I claim zero and single and DH claims married 2 and we still get a nice refund.

I am the kind of person that would like to get a refund and not owe.
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  #10  
February 21st, 2011, 02:19 PM
pattyandthemoos's Avatar Administrator
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Quote:
Originally Posted by mrsTWIZ View Post
I am lurking. But I wanted to comment. That 12K more than likely did not come out of their checks through out the year. For example, our tax refund was 9,000. Most of that was credits and deductions. Only about 1200 of it was from our taxes paid in by DHs job. We claim 0. I suck at saving and it is nice to have money come in after a hard year.
I realize that we could get it through the year (I bet most people know that). We do fine living, that extra few bucks a month is not going to really help.
I think that is true in some cases but I have friends that pay in as much as $10,000 or more - taken out of their checks - and I just don't really get that.

We may end up getting a tax refund this year because I spent a HECK of a lot of money in medical expenses this year. So, if I get a refund for that reason, then yeh, I'll take it. But, I don't get the logic of having the IRS hold your money for you.

FWIW, I suck at my tax knowledge so I don't know all the ins and outs. I have an accountant do mine and so I don't know how everyone gets their refunds.
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  #11  
February 25th, 2011, 10:58 AM
Caelen's Avatar Platinum Supermommy
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I'd prefer to get as much as possible month to month, but with deductions and credits we still end up with a halfway decent return. It was ~4500, that's the most we've ever gotten back. I'm just happy if we don't pay in though, we almost had to last year when we paid off my car. We also claimed a bunch of building materials like our energy saver appliances that qualified this year, so that also bumped our return up. It is nice to get some money back on those kind of things because it turns out almost like a discount on the item for the water heater, dyer etc.

I also think a large part of it is knowing what you qualify for and having the want to to go through and figure it all out. We noticed when we went in to have our taxes done by someone else, they generally didn't find as much as DH and I did on our own.

I will say that it was definitely good timing for tax season and that we got a decent return this year. We did have some debt from remodeling/materials that we needed to pay off relatively quickly. The return enabled us to pay it off early instead of having it go month to month.
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