$5100

[HeatherC]

I have a question that I'm hoping someone can answer.

We also bought a new car last year. What is the deduction/credit and is it only for certain cars? Thanks!!

 

[KramBerries]

I'll be getting a bigger than usual return this year. I shifted from a Roth 401K to a regular 401K and I started using an HSA. I'm still waiting on a couple of 1099-INTs from my bank, a 1099 from my photo hosting site, and a 1099 from Merrill Lynch. I also need a K-1 from an MLP I invested in. While I have my W-2, it's incorrect, so I'm waiting on a corrected one.

My biggest frustration is with all of these target tax credits. I bought a used car, so I didn't get the car credit. No one gave me a credit when I bought my house a few years ago. I didn't get the child credit. I didn't get the Make Work Pay credit (apparently, you can't work too much). It's a mess.

I spend a ridiculous amount of time learning about the tax code so that I can minimize my tax hit. That's time I could spend doing something productive if we had a simpler tax system. Instead, I'm researching 401Ks, Roth 401Ks, IRAs, Roth IRAs, Flex Spending Accounts, Health Savings Accounts, 529 College Savings Plans, Coverdell Education Savings Accounts, etc. I also have to understand about the various timings for different capital gains rates, how to avoid the wash sale rules, and other investment gimmicks. And then there is the AMT with a different set of rules. Why can't we have a nice simple system with a handful of rates and no deductions???

This years tax tricks:
1) Paid my property taxes in January for last year and December for this year to maximize my deductions. Next year, I won't pay property taxes, so I'll get the standard deduction. Of course, that means I'll also shift other deductions like charitable contributions.
2) I've been making contributions to a non-deductible IRA for my wife with the anticipation that I'll be able to convert it to a Roth IRA this year. They won't let me contribute to a Roth IRA, but they will let me convert a regular IRA (with hideously complex rules) to a Roth IRA. Why? Who knows. Taxes never make any sense to me.

 

[ICF]

I have a question that I'm hoping someone can answer.

We also bought a new car last year. What is the deduction/credit and is it only for certain cars? Thanks!!

for the most part it is any NEW car, and you can deduct the taxes paid on the car.

 

[Green Tea]

I bought a new car 2 weeks before the starting date of the credit for sales taxes.

 

[Christine]

I think my "refund" would have been the same as last year, which would be non-existant! It's hard to tell though because I did get a new garage door and insulation material put under my new siding, so I did get a tax credit for that, which gave me an actual refund this year.

Other than that, I pay, I pay, I pay. I claim "0" at the higher single rate, plus I have an extra $100 taken out of my paycheck to go to Federal taxes. It sucks.

On top of it all, my daughter started college this year and they disallowed me the tax credit for that because I, apparently, make too much. I don't feel wealthy by any means, I just live in an area where my pay is high do to high cost of living. So I get penalized for that with tax credits.

 

[Tiggerlover91]

Yeah but that interest that you're getting from the bank is only around 1% on a simple savings account. If you have a hard time saving as a lot of people do it's better for Uncle Sam to do it for you. Congrats on the big return. Spend it wisely.

Thank you.

What works for you may not work for others.......some people may have variable expenses and may need that $100 extra a week at times and not just want to send it to a savings/retirement fund. Some people like that they get 1 big check to do something special with once a year.

Besides, the ' interest' they are losing -- if kept in a liquid savings / money market account is less than $100 (assuming $5000 put in it over the year @ a 2% rate of return) and for most people if left to 'save' that money themselves would probably end of spending most of that money instead of saving it and nothing to show for it rather than be able to do something 'fun' with when they get that big refund.

 

[Slippy]

I really hope most people don't see the federal government as being their disciplinarian.

 

[Tiggerlover91]

I really hope most people don't see the federal government as being their disciplinarian.

 

[KramBerries]

Besides, the ' interest' they are losing -- if kept in a liquid savings / money market account is less than $100 (assuming $5000 put in it over the year @ a 2% rate of return) and for most people if left to 'save' that money themselves would probably end of spending most of that money instead of saving it and nothing to show for it rather than be able to do something 'fun' with when they get that big refund.

Comparing overpaid taxes to liquid savings isn't fair. It's more like buying a $100 CD every week that doesn't mature for anywhere from 13 to 1 month. In today's interest rate environments, that still probably doesn't amount to much. Based on my calculations, saving an extra $100 at an annual rate of 1% would earn you $30.61. If you were getting a return of 5%, that would boost to $155. Neither of those numbers adjusts for inflation.

By having lower withholding, you will have quicker access to the money. For some people, that's a big benefit because it increases their liquidity. For others, that's a disadvantage because they can't control their spending. They might prefer to save a significant sum but lack the willpower to do it any other way. Sadly, I suspect that most such people will quickly spend the refund and put themselves back in the situation of having no savings.

 

[dejr_8]

Even if you get the concept -for the average tax payer the amount they are losing in interest in negligible. Especially now

Also many of these people had life changes that they could not predict.

All I can say is WOW. Why wait a year to get money that is yours? What if in June a sudden expense pops ups and you don't have the money to pay it because you have been giving Uncle Sam an extra $100 a week.

Even without interest, I would still rather have that $100 a week in my pocket.

And now to the bolded statement. Tax payments and withholding are not Static for the year. If you have a change in employment or compensation throughout the year you can change your withholding (W4) or make an estimated Tax payment.

People need to get smart about paying taxes. Every year I check my taxes in June/July to make sure that I am paying the proper amount. If I am off I change my withholding. It is not hard to do.

 

[dejr_8]

For those that may not be aware the number exemptions you enter on your W4 does not need to be equal to the number exemptions on your 1040/1040A.

By claiming more exemptions on your W4 you will lower you weekly withholding taxes. I personally claim 10 exemptions on my W4 and only 4 on my 1040.

 

[phorsenuf]

If people are ok with Uncle Sam holding their money and getting a big check at the end of the year than so be it. Just because some of you don't like it doesn't mean you need to give them a hard time about it. I'm sure they are quite aware of how it goes but it's their choice. So why not just leave them alone and let them celebrate instead of dragging them down.

I know I like getting a good sized check at the end of the year. That's our 'fun' money and we blow it on things we normally wouldn't during the year. But again, our decision and we shouldn't be judged for it because you don't think it's right.

 

[dejr_8]

If people are ok with Uncle Sam holding their money and getting a big check at the end of the year than so be it. Just because some of you don't like it doesn't mean you need to give them a hard time about it. I'm sure they are quite aware of how it goes but it's their choice. So why not just leave them alone and let them celebrate instead of dragging them down.

I know I like getting a good sized check at the end of the year. That's our 'fun' money and we blow it on things we normally wouldn't during the year. But again, our decision and we shouldn't be judged for it because you don't think it's right.

Because not everyone is aware that you can control the amount of your refund by changing your withholding. To some it seems like "manna from heaven" that they are getting a big return.

 

[Minnesota!]

Letting "Uncle Sam" have an INTEREST FREE LOAN of your money is not smart. You ARE NOT GETTING money from "Uncle Sam". He is letting you have your money back.

Be smart - adjust your withholding so that you get that $100 EVERY week as opposed to having to wait a year to get it back.

If you look at your tax return as a "savings plan" then set up an automatic investment plan with a mutual fund deducting the $100 every week so at least you get interest on the money.

I make sure that I get back as little as possible. A better case is to owe "Uncle Sam" at the end of the year. Then YOU GOT and INTEREST FREE LOAN from him!!!

I am fully aware of where my money is coming from. However, I personally LOVE getting a big check in Feb. If I was getting the money weekly in my check, it would be pissed away. Getting a 6K check in Feb is fabulous!

 

[dejr_8]

I am fully aware of where my money is coming from. However, I personally LOVE getting a big check in Feb. If I was getting the money weekly in my check, it would be pissed away. Getting a 6K check in Feb is fabulous!

Better than having an extra $120 a week?

To each his own.

 

[ICF]

Better than having an extra $120 a week?

To each his own.

for some, yes as people have tried to expalin to you and others before.

A small amount (for most it would NOT be $120 wk unless you are getting over $6K back as a return) likely gets lost in the shuffle a big return amount funds a vacation/home repair or other 'fun'.

Judge not, lest ye be judged and do what works best for YOUR financial situation.

 

[phorsenuf]

Better than having an extra $120 a week?

To each his own.

Yep, to each their own. They are happy and that's what matters.

 

[TheZue]

When people are talking about paying off credit cards they may have been better off to just had the correct amount of money during the year. It isn't about how much they are saving, but instead the interest THEY paid because the government had control of their money.

 

[Cindy's Mom]

If people are ok with Uncle Sam holding their money and getting a big check at the end of the year than so be it. Just because some of you don't like it doesn't mean you need to give them a hard time about it. I'm sure they are quite aware of how it goes but it's their choice. So why not just leave them alone and let them celebrate instead of dragging them down.

I know I like getting a good sized check at the end of the year. That's our 'fun' money and we blow it on things we normally wouldn't during the year. But again, our decision and we shouldn't be judged for it because you don't think it's right.

Perfectly said!!!! Every single year, this same thing pops up in a 'I got a big refund thread". Why can't people just let other rejoice.

I'm fully aware that I can change my deductions or open a special savings account and add $100 each week. As some said, $100 bucks gets lost in the shuffle. Its really a pizza dinner for 4 at a restaurant 2 times....big deal

DH and I plan our savings, but that income tax refund check is for pure and total FUN!!!! We go to visit my parents in So Florida, we put some down for our summer vacation, we go shopping heck, we do what ever we want We put that in a separate account and just enjoy!

Why would people hate on that

 

[MM27]

I didn't do my taxes yet but I bought my first home this year so that $8000 new home buyers credit is coming my way soon It will be going right towards my mortgage though.