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Old 01-25-2013, 02:38 PM   #16
loveysbydesign
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We do the same thing, although our refund isn't much compared to others we know...we use half for bills and half for vacay.
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Old 01-25-2013, 02:59 PM   #17
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Originally Posted by Ed J View Post
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.
It wouldnt even have to be that nice of a dinner -- $5K of a refund @ 1% interest would be a whopping $50 (actually less than that given that you wouldn't "save" the whole $5K on Jan 1st).

You then of course would have to pay tax on the interest income you did earn.

If it works for you then that's great as long as you aren't paying CC interest or something every month. If that's the case, then you should get more back each paycheck and pay down the CC's.
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Old 01-25-2013, 03:11 PM   #18
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I have to admit I love getting a refund also. In all honesty, I think of it as a way to "save" extra money throughout the year rather than blow it on something we don't really need.

We are only a family of 2 with one income (no kids) and I remember last year my husband adjusted it so we wouldn't get so much money back. We used to claim zero, now we claim one. We are getting $1500 back this year. I was expecting maybe around $600-$800 and he was anticipating $1000 so we were happy to see the $1500+ number!

100% of that will go directly into our savings account when we get it, and then we will most likely be opening up a second savings account with a higher interest rate (for keeping a minimum balance of $3,000 or so). We are saving for our next house and trying to conceive with infertility issues (which insurance does not cover at all -- even basic bloodwork) at the same time so we're saving every cent we can.

If we would have broke even, or close to it, I know for a fact we would not have that $1500 in our savings account already that we will be getting shortly. So, for us, we're okay with it.

...When we did our taxes, my hubby did say, "I'm submitting our taxes ASAP before the government runs out of money". LOL!
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Old 01-25-2013, 03:14 PM   #19
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We do the same thing. I think of it as a place to stash some cash. This year we are using it for re-carpeting the bedrooms and camp fees for the kids. Works very well for our family, as we save money in other accounts as well.
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Old 01-25-2013, 03:24 PM   #20
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We always owe - I never want to be in the position of a big refund. The way the politicians are running this country I would be too fearful that the government doesn't have the money to pay the refund.
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Old 01-25-2013, 03:29 PM   #21
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Originally Posted by bumbershoot View Post
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.
My dad's company built multi-million dollar homes for famous/wealthy people. Beautiful award-winning homes. We always had deck boards that needed replacing, other repairs around our house that always waited months. It's the old cobbler's kids saying... You can know the right information and not use it. We even had a family doctor who was a friend ask my mom what he should do about his upset stomach one night.
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Old 01-25-2013, 03:45 PM   #22
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We always owe - I never want to be in the position of a big refund. The way the politicians are running this country I would be too fearful that the government doesn't have the money to pay the refund.
They can just add it to the national debt. Unlike states, who have had to issue IOUs to taxpayers in past years, the federal government does not have to balance its budget.
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Old 01-25-2013, 05:14 PM   #23
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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.
If someone was paying high interest on a credit card, then yes, I'd say they should change their withholding and make extra payments on the card monthly with that money.

It's all a moot point for me anyway, since I haven't seen a tax refund since I married my husband six years ago. :P
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Old 01-25-2013, 05:35 PM   #24
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Originally Posted by Ginny Favers View Post
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.
I'm right there with you. DH was self-employed for so long that I took the "overpay just in case" approach - overpaying will never get you hit with penalties and interest, while underpaying certainly can. Since tax season lines up with slow season in his line of work I'd rather get a nice surprise than an unpleasant one when we file.

Besides, what is that extra money in the paycheck getting right now? I'm earning .75% interest on my "hands off" (vacation/large expense) savings account and counting myself lucky to get that because our regular household savings is getting a whopping .2%. It isn't as though people taking the "interest free loan to the IRS" route are losing out on much interest benefit.
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Old 01-25-2013, 06:00 PM   #25
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I'm right there with you. DH was self-employed for so long that I took the "overpay just in case" approach - overpaying will never get you hit with penalties and interest, while underpaying certainly can. Since tax season lines up with slow season in his line of work I'd rather get a nice surprise than an unpleasant one when we file.

Besides, what is that extra money in the paycheck getting right now? I'm earning .75% interest on my "hands off" (vacation/large expense) savings account and counting myself lucky to get that because our regular household savings is getting a whopping .2%. It isn't as though people taking the "interest free loan to the IRS" route are losing out on much interest benefit.
There is no penalty for underpaying your quarterly taxes if you owe less than $1K or if you paid 90% of the taxes owed for 2012 or if you paid 100% of the tax shown in 2011, whichever is smaller.
http://www.irs.gov/taxtopics/tc306.html

If you find that your income is down drastically from the prior year, you can always adjust your last quarterly payment to reflect the reduced income.
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Old 01-25-2013, 06:06 PM   #26
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My dad's company built multi-million dollar homes for famous/wealthy people. Beautiful award-winning homes. We always had deck boards that needed replacing, other repairs around our house that always waited months. It's the old cobbler's kids saying... You can know the right information and not use it. We even had a family doctor who was a friend ask my mom what he should do about his upset stomach one night.
Don't forget the doctors who are overweight. Doesn't mean the are bad doctors. Some of them are the best surgeons you can find. It' not like he's mismanaging his money and deeply in debt. He is just allowing a little extra withholding.
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Old 01-25-2013, 06:13 PM   #27
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No shame here

We do it too! We would earn next to no interest on the money or we would just absorb it into our daily expenses. For us it is how we have vacation money every year. If the way you handle your refund makes you happy who cares what anyone else thinks about it.
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Old 01-25-2013, 07:04 PM   #28
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We always owe - I never want to be in the position of a big refund. The way the politicians are running this country I would be too fearful that the government doesn't have the money to pay the refund.
That actually happened in California just a few years back - the state held refunds because of budget/cash flow issues. I was definitely glad I owed that year.
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Old 01-25-2013, 07:05 PM   #29
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Well, at least your not a finance student.
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Old 01-25-2013, 07:14 PM   #30
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Think about this, a $5000 refund would equate to an extra $445 in your paycheck each month. That is a car payment...

Invest that same money inside your Roth Ira in a good mutual fund for 30 years and you would have $1,570,811.63 to retire on.
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