Am I getting back too much tax refund?


I'm on my 103rd attempt to grown
Mar 4, 2004

About two years ago we received about $10,000 back for our tax refund. We knew that was too much - turns out we were still filing "married 0" even with three kids! So anyway, we filed "married 3". I'm a SAHM for the most part (sometimes work seasonally). Even after the refiling, we still received about $6,000. Is this too much?

We do have debt. We live in NE so even with a huge down payment, we have a large mortgage. We also have a home equity line and a DH who will be returning to school for graduate work. That's probably what keeps us with large refunds.

Does anyone think I should refile again...and how so? I'm not sure what the appropriate amount to receive back should be. TIA!
Most financial advisors would suggest that you change your withholdings.

Ideally, you should be getting nothing back. But that doesn't work in the real world, as you've already seen.

A $6000 refund means that you're overpaying your taxes to the tune of $500/month! Think of what you could be doing with that money if you had it in a savings account, invested it in your children's college funds or even your retirement account! My advise would be to file to change your withholding so that you can put that money to good use instead of giving Uncle Sam an interest-free loan.

ETA: You and your DH are also considered to be dependents. If you're filing "married 3", you're having your withholding set at only 3 dependents instead of 5.
I think it depends on how the money is earned. We have 4 children, but my DH makes salary + overtime and bonuses. Overtime and bonuses are taxed much higher, so we always end up with a larger refund. From what i've been told you can not do anything about the taxes withheld from overtime and bonuses. If someone knows different please correct me.

DH is a teacher and also coaches. Would the coaching be considered overtime? (My guess is "No").

Also, THANKS EVERYONE!!! I always withheld more because I owed one year and never want to do that again!
We also get a large refund like the original poster. I know most financial advisors would tell you to change your with holdings, but we don't. We know that we can not be trusted to save that kind of money each month. There is no way we would put aside $10,000 on our own so despite not making interest on it, it works for us. The original poster and her DH should ask themselves the same questions. Is it working for you? Would you be able to save that much money on your own?
We like getting a fair amt back as well. dh is horrible about savings. I consider this our Disney savings account. :laughing: We use it to go to WDW. If our trip has already been paid for, I slip some into savings and buy big things that we need and pay a lump sum on our van and camper.

We were getting a large refund back every year, which we liked because it was like an automatic savings account. Then we met with a financial advisor, who pointed out our "IRS savings account" paid zero interest. We upped our exemptions and set up that amount to be automatically deducted from our checking to our ING savings account so we could make at least 4% interest, and the money wasn't available for our use (we figure the ING account is off-limits). When you figure how much money you make at 4% interest on $6,000, you may change your mind. ;)
This is a battle my DH and I have been fighting since we got married. He had always had the maximum amount taken out on purpose so he'd get a big refund. I of course, had read a bunch of financial books, and tried to explain the "IRS interest-free savings", but he wouldn't budge.

Last year, in spite of changing our withholding (he finally gave up), we still got a decent refund. So I was confused. What happened with us (and I think this might be part of the deal with the Original Poster), I'm not an accountant so I'll try to explain. When I just looked at our *deductions* in fact we were coming out pretty close to $0 on it, just like you should. But. We have two kids, so we get the Child Tax Credit. The *credit* is a whole different thing. This past year we didn't qualify for EIC but that's the same idea.

I'd think the only way to get to $0 in that case would be to have less taken out of your check than the formula would tell you to do, which would be a little scary just in case you were wrong. Because really we came out right on the taxes part, our refund was all the Credit money. I think you get $1000 per kid, so with 3 kids that's $3000 worth of credit right there, plus if you get EIC that would be even more. It could be that the $6000 refund is all your "credits".
I agree with those who say if you're NOT going to invest that extra money each month, then keep it as it is. Yes, I understand that the ideal way is to get as close to nothing back as possible. But realistically, that doesn't happen for a lot of people. Instead they use money from their larger refund to take care of big bills or open new investments.

So, look at your specific situation. If it's working for you, then don't worry about fixing it. If you think you'll invest that money, or it will make a difference each month, then change it.

As for us, we get typically $10-13,000 back each year. But we use it for major payments on something, invest some, put some into the kids accounts, etc... And that works for us!
Even after the refiling, we still received about $6,000. Is this too much?

Do you really need to ask? YES!!! That's too much!

Let me ask you this. Assume that you knew me IRL and trusted me. Would you lend me $500 every month as long as I promised to pay it back the following April with zero interest? If so, I'll give you my number so we can arrange that deal.

The number of exemptions you claim has nothing to do with how many are in your family. Go to and use their witholding calculator to figure our what you should be claiming. Offhand, it sounds like you need to be claiming 6 or more but run the numbers to be sure. If you aren't automatically sending money to your 401K, Roth, 529 or other savings, do that as well so that you don't have an opportunity to frivolously spend that new found money.
I agree with MadForTheMouse and DisneySteve...if I got that much money back I'd KNOW we were losing interest...and every penny counts for Disney!

If it's the only way some of the posters can save money...for them it's worth it to pay the few hundred bucks so they can get it all at once a year later from Uncle Sam. It's better to do that than spend it all and not save.
When I worked, I always claimed 0 deductions even though there were two of us. Being a single mom, I filed head of household. I normally got back around 8 to 9k. I set it up on purpose to make sure I got the money back. Yes, I know that I was over paying and that I could have put the money in a savings account. It wouldn't have happened. There were always too many things that came along to take the money. I have never been a great saver. Sorry, that's just the way I am. So, I made sure I got a large refund back. The refund paid for our very nice vacation to WDW each year.

IMHO, it is up to each person to decide how they want to do their withholding. As long as Uncle Sam gets his share, it is no one's business how you do things. Do it the way it works best for you.
I don't know we have been getting about $4K back the last few years. In our case, it's all the credits added to practically our entire mortgage payment goes to interest that we can write-off.

The first year we got that much back I was perplexed (since due to circumstances we paid in less than we got back -- still don't understand it) and was waiting for an audit but no audit & we have been getting about the same amount back for the past 3 years (since we added kiddo #4). I know it was with all the credits.

This year will probably be higher because DH started a new job and somehow got less deductions on his W-4 form than he did for the previous job, so they are taking more taxes out. My hunch is we will get that all back then add the credits on and bingo we are in the $4,000 amount (if not more).
Whether you invest it or not, giving the government an interest free loan is stupid in my opinion. It's my money, it needs to be in my pocket.
IMO, even if you're not going to SAVE it, that money every month could be used towards day-to-day things. That's our case.

It's only the 3 of us, but I think we have it set up with 5 dependents? Maybe more. Over the last few years we've increased it by one, to see the change it causes. So each year we've gotten more in our paycheck (making day to day life easier) and less of a refund.

The idea of getting a nice fat 10K sounds great, but that's YOUR money to begin with, and should have been in your paycheck, not making interest for the gov't (unless you're REALLY patriotic, I suppose).
We get about $4-$5K back each year and leave it alone because I do some 1099 work on the side and have a fear of having a "good" year and getting nailed in April.. It works for us.
I changed my withholding a few years ago when I was paying off credit card debt. It gave me about $100 extra a month which went straight to the CC. It sure helped me pay if off a lot faster! Now it goes straight into savings.
I got a pretty hefty refund ($5500) last year because of the Earned Income Credit and the Child Tax Credit. I'm taking Advance Earned Income Credit this year, but there's only so much you can take--I'll still get a $3000 refund because it's basically a gov't gift to me.
I'll still get a $3000 refund because it's basically a gov't gift to me.

How is it a gift? It is your money that they've been taking out of your pay all year. Then they return it to you without any interest. Doesn't sound like a gift to me.


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