Disney Information Station Logo

Go Back   The DIS Discussion Forums - DISboards.com > Disney Trip Planning Forums > Budget Board
Find Hotel Specials & DIScounts
 
facebooktwitterpinterestgoogle plusyoutubeDIS UpdatesDIS email updates
Register Chat FAQ Tickers Search Today's Posts Mark Forums Read





Reply
 
Thread Tools Rate Thread Display Modes
Old 01-25-2013, 11:26 AM   #1
marius97
DIS Veteran
 
Join Date: Mar 2009
Location: Southwestern Michigan
Posts: 986

I have a tax confession to make

I am an accounting student (adult). Between my wife's good job, deductions for three kids and my school expenses, we always get a really BIG refund. I know that is not advisable because it is giving the government an interest free loan. Every class I take always has at some point a lecture about the evils of big refunds. I just sit there and nod my head in agreement as I think about my vacation being paid for out of our refund. I'm not disciplined enough to save out of each check if we adjusted things to get a smaller/no refund. Even if I was, invariably some of that money would disappear into general household needs. That disappearing money would negate any interest I could have earned by sticking the saved money into something that would earn a small interest rate. I am so ashamed of my big refund but I don't care anymore once we see the Welcome to Florida sign.
marius97 is offline   Reply With Quote
Old 01-25-2013, 11:28 AM   #2
pocomom
Brr.....
 
Join Date: Oct 2012
Location: On top of a mountain, all covered in snow!
Posts: 552

Done it before myself! Hey how ever you manage to save, right! Now I rely on autodraft to savings out of my checking account- like paying myself!
pocomom is offline   Reply With Quote
|
The DIS
Register to remove

Join Date: 1997
Location: Orlando, FL
Posts: 1,000,000
Old 01-25-2013, 11:37 AM   #3
Ginny Favers
I told my husband I think they must put crack in it
 
Ginny Favers's Avatar
 
Join Date: Dec 2011
Posts: 1,838

I'm with you. Last year my refund was huge. But I am worse.

The worst part about it is, I had no idea it would be that huge. I thought maybe we'd owe. Our income and situation fluctuate so much I will fully admit I have no idea when it comes to taxes. This year, we may owe. We may get a big refund. I admit it. We're idiots.
Ginny Favers is offline   Reply With Quote
Old 01-25-2013, 11:42 AM   #4
Ed J
Removing my ears
 
Ed J's Avatar
 
Join Date: Oct 2006
Location: Near the beach in NJ, not the shore, tourists call it the shore. You know, right where Sandy made landfall.
Posts: 791

Those who preach that are stuck in a time warp. The amount of interest you would collect on a sizable refund (say 5K) would be wiped out going out to 1 nice dinner with the family. A person has to know their limitations.

BTW I would not admit this to potential clients if I were you .

I pay every year so this isnt an issue for me
__________________
2/14 CBR Cinderella Royal Family 5K - 6/14 Boardwalk & Royal Pacific
7/13 PBH Universal - 11/13 (Jersey week) Marriott's Imperial Palms & Pop
7/12 HRH & Crown Plaza Universal - 11/12 (Jersey week) Marriott's Imperial Palms & The Swan
11/11 (Jersey week) Marriott's Lakeshore Reserve & POR
8/09 Grand Californian Hotel 11/10 (Jersey week) Marriott's Cypress Harbour & Holiday Inn @ DTD
11/08 (Jersey week) Marriott's Cypress Harbour & The Crown Plaza Universal
11/04 (Jersey week) Cypress Pointe 11/06 (Jersey week) Marriott's Horizons & The Nick
11/00 (Jersey week) Holiday inn ~ Now the Nick 11/02 (Jersey week) Marriott's Grande Vista
3/1989 Pineapple Peteís Hawaiian Retreat 11/1997 Embassy Suites

Iím not good at many things, but 1 thing Iím very good at is going on vacation
Ed J is offline   Reply With Quote
Old 01-25-2013, 12:30 PM   #5
2disneyboys
DIS Veteran
 
2disneyboys's Avatar
 
Join Date: Feb 2009
Posts: 1,235

Personally, I don't want a huge refund, but I don't want to have to pay either.. its a fine line!

However, my In-Laws could not save a nickle if you somehow pried it out of thier hands and put it in a valut they could not acess... yes, its that bad! so them changing withholdings around so that they get a big refund helps them.. thing is you have to know when to time things with that family. If you get married/have an accomplisment/baby etc in Oct, your not getting much from them, but if it happens during tax season, who-hoo!

I agree w/ the prior poster - you have to know your limitations and work with those! (now don't tell your CLIENTS )
__________________
~I apologize in advance for the many typo's you will find in my posts! It's an unfortunate result of adding most posts by a tiny phone screen. . ~

DH ME
DS#1 13 DS#2 10

Lots of Magical Memories between 1999 - 2012
Maybe another visit in 2013 ? I can only hope!
2disneyboys is offline   Reply With Quote
Old 01-25-2013, 12:32 PM   #6
angierae
DIS Veteran
 
Join Date: Mar 2010
Posts: 2,320

I too think that "it's an interest free loan!" is advice for bygone days. Savings account interest right now is so minimal, if it is helpful for you to get the $ all at once, you might as well. You aren't missing out on hundreds and hundreds of dollars in interest.

We almost always owe because my husband has a large amount of self-employment income, so we pay both halves of social security.
__________________
No ticker! Looking at a Western US Trip for 2014 and maybe Food and Wine adults-only trip in 2015.

10-2013 - Pop Century / 4-2012 - Port Orleans French Quarter / 5-2010 - Pop Century
angierae is offline   Reply With Quote
Old 01-25-2013, 12:55 PM   #7
MomToOne
DIS Veteran
 
Join Date: Mar 2010
Posts: 1,410

On a show not too long ago, Suze Oreman even said that since interest rates were so low right now, if it helps you save then go ahead and overpay taxes and get a big refund.

Of course, that is her advice only as long as interest rates stay low.
MomToOne is offline   Reply With Quote
Old 01-25-2013, 12:59 PM   #8
buckirj1
DIS Veteran
 
Join Date: Apr 2008
Posts: 520

I figure giving the government a interest-free loan is one of the few civic-minded things I do. I've done it for most of my working life. Ain't I patriotic?!?

Looking forward to getting a refund. And yes, since I have little other debt, half will go to savings and the other half will go toward a vacation. What others folks do is their own business.
buckirj1 is offline   Reply With Quote
Old 01-25-2013, 01:06 PM   #9
Marionnette
Wishing On A Star
I stop in the middle and make others step over me while pretending not to understand English
 
Marionnette's Avatar
 
Join Date: Sep 2009
Location: Pleasure Island
Posts: 6,857

Even though interest rates on savings are low, it doesn't make sense to let Uncle Sam have that money if you are paying interest on credit card balances. Sure, 0.75% on a passbook savings account means very little at the end of the year but 13.99% on a credit card balance does.

I hate giving the government a loan. They take enough of my money in the end, so I'd rather pay whatever I owe in April than get a big chunk back. Considering how they waste the money, I feel that I'm already doing my civic duty by paying taxes at all.
__________________
Opinions, suggestions and comments are based on my own experience and should not be regarded as the absolute and only possible outcome of any situation.
Your mileage may (and probably will) vary.





Marionnette is online now   Reply With Quote
Old 01-25-2013, 01:09 PM   #10
danielle79
Dreaming of the Castle!
 
danielle79's Avatar
 
Join Date: Jul 2010
Location: Eden, NY
Posts: 269

Your confession is mine too! I know we should change our withholdings so we basically break even but we utilize this $ as our savings account, and if it was in a savings account it would hardly earn any interest at all plus we would dip into it and use it! We are not very disciplined with savings This year's refund is ear marked for our house roof and next year it will be a Disney vacation!!!!!
__________________
ME DH DD16 DD9 DD8

danielle79 is offline   Reply With Quote
Old 01-25-2013, 01:15 PM   #11
cmwade77
DIS Veteran
 
Join Date: Jun 2005
Posts: 3,841

I have changed our witholdings so that we should break even, but with TurboTax, there is always something that helps us get a large refund.
cmwade77 is offline   Reply With Quote
Old 01-25-2013, 01:26 PM   #12
Halbleib1
DIS Veteran
 
Join Date: May 2007
Location: PA
Posts: 1,626

Quote:
Originally Posted by cmwade77 View Post
I have changed our witholdings so that we should break even, but with TurboTax, there is always something that helps us get a large refund.
If you use the withholding calculator on the irs website you will break pretty close to even. I have found it to be the most accurate way. It is down at this time every year but it should be back up before too much longer.
__________________
ME rincess: DH DS DD:

Our First Christmas at Disney World! Staying at Pop Century December 14-24th!



Halbleib1 is offline   Reply With Quote
Old 01-25-2013, 01:28 PM   #13
timmac
DIS Veteran
 
timmac's Avatar
 
Join Date: Jul 2007
Posts: 1,869

I make a post similar to this each year, so apologies to those of you who have heard this from me previously.

I'll start by offering that if the "big refund" approach works for some people, and they understand (at least generally) that it's theoretically sub-optimal, but they are happy anyway, then great... whatever works for you and makes you happy.

That said, I do think it's worth painting the whole picture. The whole argument about "interest free loan" vs "interest rates are low now" is a very tired argument, and only looks at the issue in a very superficial manner.

First, the question of low interest rates. If you're only looking at the 0.2-0.5% you're getting from a basic savings account at your local bank, then sure, they're low. If you start considering other investment vehicles, like decent mutual funds, then one can still realize higher returns (yes, with increased risk, of course).

Apart from just interest, however, it's worth a quick look at inflation and the purchasing power of the money. Keeping in mind that tax overages are held by the government an average of 8 months from payment until refund (remember that those taxes paid in the first check of the year are held for about 14 months, and by the end of the year, about 2 months), the purchasing power of those same dollars declines by as much as 2%.

Though it's different for everyone, the situation may be further exasperated if there are debts, like a car loan--or worse yet a higher interest credit card-- that could be paid off sooner, or would be paid off by the refund anyway. Then we are not only talking about foregone interest earnings, but also unnecessary interest paid, which may be 10% or even higher in some cases.

One other issue I like to point out, is that there is no guarantee of exactly when one will get the big "lump sum" back from the government. The
ability to file, or more importantly, to have a refund processed, is often delayed by any number of circumstances. Without fail, every year, these very boards see a handful of people freaking out that their refund is taking longer than expected. In the worst cases, that's accompanied by a comment about how they were "counting on" that money for whatever purpose. State taxes are even more frequently at risk in this same manner (although there is often less flexibility with withholdings at the state level).

Okay, now that I've gotten all of that out of my system, I'll say again that really, there is nothing wrong with anyone doing what works for them and makes them happy. I also realize that frequently income and circumstances change in an unexpected way that can't easily be planned for. I get that, and find myself in that boat often. My only gripe is that the "interest rates are so low it doesn't matter" line of thought is often short sighted, and is far from a conclusive evaluation of the issue.
timmac is offline   Reply With Quote
Old 01-25-2013, 01:31 PM   #14
bumbershoot
DIS Veteran
 
bumbershoot's Avatar
 
Join Date: Mar 2007
Location: Tacoma WA
Posts: 45,242

Quote:
I'm not disciplined enough to save out of each check if we adjusted things to get a smaller/no refund.
If I used an accountant and they shared that with me I would fire them immediately. That's just disturbing.

I know I'm saying it harsher than the others, but seriously, that's just weird. The only accountants I know in real life are INCREDIBLE savers, and hold on to every cent they can. That's the only kind of accountant I could even think about trusting.
__________________
-molly + robert + eamon (10!!)

DLR '05-'09 found within this link
DLR 7,9,12 2012 Universal Feb '12 DLR Dec '11 and Feb '12

Made weight goal 1yr8m8days after starting...currently working to maintain 85 lb loss thanks to Weight Watchers!
bumbershoot is offline   Reply With Quote
Old 01-25-2013, 01:36 PM   #15
mrodgers
DIS Veteran
 
Join Date: Oct 2009
Posts: 2,356

I didn't change my withholdings because of interest or interest free loan or investing or anything. I changed mine because we needed the money to pay bills.

I could care less, I like getting a nice chunk of cash in March to pay for vacation. I have a lot of exemptions and still get $1500 back. I'm not like the others at work though who get $8000 refunds. That's a bit much.
mrodgers is offline   Reply With Quote
Reply



Thread Tools
Display Modes Rate This Thread
Rate This Thread:

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

facebooktwitterpinterestgoogle plusyoutubeDIS Updates
GET OUR DIS UPDATES DELIVERED BY EMAIL



All times are GMT -5. The time now is 03:34 PM.

Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.

Copyright © 1997-2014, Werner Technologies, LLC. All Rights Reserved.