Getting a Tax Refund is Bad

[elle_chris]

Can someone explain the AMT tax to me? We''ve been paying it for years but I don''t understand it.
This year we owed

 

[Shoopy]

Agreed Kenny!

I wanted to provide this tool to everyone as well:

IRS Tax Withholding Calculator

I use that calculator at the beginning of the year and again around June/July to determine how much I''ll either owe or will get as a refund and then change my withholdings accordingly.

 

[lilyfoot]

Date: 3/29/2010 6:19:38 AM
Author: Kismet
I agree that deliberately large refunds are a bad thing, especially now with the economy so bad. It would really suck if the government told you that ''yeah we know we owe you money but we''re not paying it to you because we can''t afford to.'' Aren''t some states delaying paying out their refunds already?

I haven''t looked at savings account options recently but is it so impossible to get an account where you can get direct deposit but not an ATM card, checks, credit card access or online banking; an account where you actually have to go into the bank to get at the money?

That would be my concern. Wasn''t California writing "IOU''s" for state taxes last year?

Also, I wanted to add the point of view from a "younger" generation (I''m 21), I don''t feel that young adults are told the truth about taxes. Many people that I know have NO idea that you can change your withholding, etc, as to get that money back during the year. It seems like something that should be common knowledge, but it''s not.

 

[Yimmers]

I prefer to break even or get a small tax return. DH owed several grand to the IRS one year. Imaging his surprise a few months later when they sent him another bill for taxes which would have been owed the next year. So, he paid for his 2007 tax returns, and then, had to pay out his 2008 anticipated taxes early. Turns out, if you owe a significant amount of taxes, the IRS wants your anticipated taxes early rather than in one chunk the next year. He had to pay out his anticipated taxes each quarter that year. Mind you, he owned no property at the time, is not an independent contractor, nor does he have a business which would require such a tax payment scheme. He simply did not withhold enough.

You are warned. Writing a huge check to the IRS is not a good thing. Aim to break even.

 

[missy]

Date: 3/27/2010 5:55:43 PM
Author:kenny
They do not pay you interest and you could had the use of your own money all year.


It is better to write a check every year to the IRS.

Ideally the check would be as large as possible, but not so large that it incurs a penalty.


Why are people so happy they get a refund?

Maybe because they can use the refund to buy diamonds?

This year is the first year we owe money and it is not a small amount

(though my dh assures me we did not incur a penalty). I am not thrilled because it is more painful this way though I do get your point Kenny. And you're right.

In fact, we do try to break even but that doesn't usually work out so I agree it is better to write a check than to get a check from the IRS. I would rather use that money and invest it during the year than give it to the IRS to borrow and then get back. We don't need that kind of forced savings.

 

[katamari]

I disagree. I use a lot of government services and feel fine with them getting the interest. On the scale and rates they can secure, they do much better than I can do in any of my accounts.

 

[icekid]

Date: 3/31/2010 3:46:47 PM
Author: katamari
I disagree. I use a lot of government services and feel fine with them getting the interest. On the scale and rates they can secure, they do much better than I can do in any of my accounts.

I think the government already takes plenty of my hard-earned money. We aim to avoid donating extra to them. Fortunately, we are good savers and don''t need to be "forced"

 

[that_someone_special]

How much is a big refund??? I was sad that ours was only $2600 this year. LOL They are usually bigger. ... and... I .. like it!

 

[missy]

Date: 3/31/2010 4:07:40 PM
Author: icekid

Date: 3/31/2010 3:46:47 PM

Author: katamari

I disagree. I use a lot of government services and feel fine with them getting the interest. On the scale and rates they can secure, they do much better than I can do in any of my accounts.

I think the government already takes plenty of my hard-earned money. We aim to avoid donating extra to them. Fortunately, we are good savers and don''t need to be ''forced''

I agree with icekid on this one. My dh and I pay plenty in taxes and certainly work very hard. I don''t need to be giving them more of our money for them to hold for me. We can save and invest just fine on our own.

 

[qtiekiki]

Before I got married, I was happy to get a tax refund just because I am getting money. I never thought about it as having my money upfront vs. getting it back, until I got married. Basically DH feels the same way you (kenny) do, and we try to break even, though we usually end up paying.