Disappointed with my tax refund !

[nicknamy1996]

There's a lot of us who do it that way. My brother always hassles me about letting Uncle Sam get my interest. I'd probably drive him nuts if I told him that I've already done my taxes and now I'm going to sit on them for a month or two before I submit them, and even then I'll sit on the check for a while before cashing it. I am very good at budgeting, and could easily adjust all of my numbers (deduction wise) and have more to spend or save throughout the year. I just budget everything w/o counting my tax return, so it is just strictly bonus money. We have a very detailed budget and do a good job sticking to it, but inevitably when I put that money in the bank we magically find stuff to spend it on. So the longer I can keep it out of site the better off I am.

Example: I get $40 a week in pocket money, strictly for me. A lunch here or there, McDonalds for supper one night, small purchases, etc... and I have the trusty credit card for gas and groceries. But anyway $40 a week and ususally it's pretty close to perfect. Well I bought 2 scratch off tickets the other day (first time in about a year or so) and won $50!! I cashed it in and BAM! it was gone. I stopped and rented a movie at blockbuster $5, I went out to lunch the next day at work (instead of eating our free employee meals) $9, we went out for icecream, another $9... the point is the money was gone quick.

Don't get me wrong I'm all up for spending it, the movie was good and the ice cream was delicious, but I could have bought that new DVD player that we needed. I just like delaying it, thinking about what we want to buy (and having in case we need it) I'd prefer to buy one big item that will last then to widdle it away on little stuff.

 

[hellow]

Having worked in public accounting for 15+ years, I can assure you MANY people like to set their withholding so that the refund is a good amount. Forced savings works for some people.

It's funny that there are several people that were caught by the $1000 tax credit being taken away for kids 17. I had the same "aha" this year, much to my disappointment (Haven't worked in taxes for over 8 years now, so the tax laws aren't as drilled into my head) I, too, have a junior in high school who doesn't qualify for the credit anymore

 

[bdpa]

So ... am I to understand. That you can't claim your child while they are in high school because they are 17. But you CAN claim them when they go to college? HELLO! Who does the goverment think is paying for them all this time! Glad someone explained this. I thought I was losing my mind! (And there isn't much left to lose!!)

 

[BibbidyBobbidyBoo]

From what I understand- you can still claim them as a dependent, apparently through 24 is it? if they are still in college.. it's the $1000 tax credit that is gone if they turn 17 that year. So apparently the tax credit is only up to age 16, but not THROUGH age 16 because they turn 17 sometime in that year- technically. (Worse for some people who have children turning 17 at the end of the year- so they don't even get to claim it when the majority of that year they were 16. For instance my son I'll get it only until he's 16 and one month old. That will be the last year for him. ugh)

 

[G00fyDad]

So apparently the tax credit is only up to age 16, but not THROUGH age 16 because they turn 17 sometime in that year- technically.

Not exactly. If the child was 16 for at least 6 months out of the year then you can claim them. If they were 16 for less then you cannot.

 

[imsayin]

I'm a tax accountant, so I'll add my two cents:

Not exactly. If the child was 16 for at least 6 months out of the year then you can claim them. If they were 16 for less then you cannot.

Not True! For the Child Tax Credit ($1000): Your child must be under age 17 at the end of 2004. If your child turns 17 on 12/31/04 - too sad for you.

There is a difference in claiming your child as a dependent and qualifying for the tax credit. It can be confusing - but not to the IRS (of course). Don't fill out your return claiming the $1,000 when you don't really get it - you'll be disappointed when Uncle Sam corrects you!

 

[G00fyDad]

I'm a tax accountant, so I'll add my two cents:

Not exactly. If the child was 16 for at least 6 months out of the year then you can claim them. If they were 16 for less then you cannot.

Not True! For the Child Tax Credit ($1000): Your child must be under age 17 at the end of 2004. If your child turns 17 on 12/31/04 - too sad for you.

There is a difference in claiming your child as a dependent and qualifying for the tax credit. It can be confusing - but not to the IRS (of course). Don't fill out your return claiming the $1,000 when you don't really get it - you'll be disappointed when Uncle Sam corrects you!

Wow. I always thought that they went by more or less than 6 months rule. DD is 10 so I havent run into that problem just yet. Thankfully.
Do you mean that if my kid has a birthday on December 31st then I cannot claim them because they turned 17 like about an hour before the end of the year?

 

[imsayin]

G00fyDad - you can claim them as a dependent, but not for the child tax credit - 2 different things, based on 2 different critieria.

 

[G00fyDad]

G00fyDad - you can claim them as a dependent, but not for the child tax credit - 2 different things, based on 2 different critieria.

Claiming them for the Child tax credit is what I meant.

 

[nicknamy1996]

If the child tax credit is new this doesn't really apply to that... but it all balances out in the end. Because if a child was born 12/31 you get to claim them as a deduction for that whole year. Some people push (no pun intended) to have that baby before midnight 12/31 for that extra money and I don't blame them, I would have too but since my wife wasn't due til June and August that would have been pushing it. But I'm sure that some of them will end up complaining 17 years later that they should be able to deduct their kid who qualified for 364 days that year. On the flip side they alway do those stories on new years day about the first babies of the year (by city, by hospital or whatever) and I ususally think 2 minutes earlier and you'd get enough to pay for the first year of diapers... well mayby not, those things are expensive!

I recently (I guess about 28 days ago) heard a story about a family that had the first baby of the year at some hospital 2 years in a row!!!

 

[G00fyDad]

oh well. I didnt need a New Years Eve baby. DS was born on the 4th of July. Really. July 4th, 2003. He has fireworks for his birthday every year.

 

[extremesoccermom]

Some people push (no pun intended) to have that baby before midnight 12/31 for that extra money and I don't blame them, I would have too On the flip side they alway do those stories on new years day about the first babies of the year (by city, by hospital or whatever) and I ususally think 2 minutes earlier and you'd get enough to pay for the first year of diapers... well mayby not, those things are expensive!

We tried on Dec 29th to induce the little bugger because of the weather but he refused to show up until Jan 2 so now I will be able to claim the credit for him until the end of 2006 so it works out on one end or the other.

 

[rsschneck]

We are like GoofyDad! We withhold more than needed so we have a few thousand coming back at the beginning of each year. We use it for travel, DVC dues and Christmas expenses! We like to pay everything in full. Credit card debt is not for us! We keep a rainy day fund and don't like to dip into it unless we HAVE to!

Our DD will be 8 on Monday and we have never received the tax credit! I guess we make too much money (not sure where it is ).

As far as Uncle Sam using our money I guess we will miss out on a little interest. We made VERY little on our savings interest anyway! Makes you wonder why you keep money at the bank!

 

[Grand Canyon]

Our DS 9 was born Dec 29
I was glad for the tax break

 

[BethR]

Our DD will be 8 on Monday and we have never received the tax credit!

I thought that EVERYONE who was a custodian parent got this credit on their taxes! But I was wrong! I copied this information from the IRS's FAQ's:

Limits on the Credit

You must reduce your child tax credit if either (1) or (2) applies.

1.

The amount on Form 1040, line 45, or Form 1040A, line 28, is less than the credit. If this amount is zero, you cannot take this credit because there is no tax to reduce. But you may be able to take the additional child tax credit. See Additional Child Tax Credit, later.
2.

Your modified adjusted gross income (AGI) is above the amount shown below for your filing status.
1.

Married filing jointly – $110,000.
2.

Single, head of household, or qualifying widow(er) – $75,000.
3.

Married filing separately – $55,000.

You learn something new every day!

 

[Pooh_Friend#1]

Someone at work told me that I could deduct my new car that I bought in May. Is this accurate?

 

[poohj80]

Someone at work told me that I could deduct my new car that I bought in May. Is this accurate?

If you itemize your deductions you can deduct the property tax on your car but not the cost of the car unless maybe it is used as a business expense. If I'm wrong, someone please tell me how to deduct the price of my car!

 

[sanibelover]

They are probably talking about the sales tax you paid. You can either deduct sales tax you paid for the year (on everything) or the amount you paid for state income taxes (amount withheld plus any extra you paid in). For most of us (unfortunately) the state income taxes win hands down.

 

[tggrbuny]

I was reading in all of the post quietly, was going to keep keep quiet: After all you were all getting the rules right after a few posts.

Suddenly I felt like I wasn't being a good board member. So hear it goes: I work at Internal Revenue. (pLease don't hate me, I am in the fix problem area!)

First of all for the new car purchase: There is a new provision in the law this year that if you itemize, you can take the higher amount: state & local sales taxes or state & local income taxes. This of course is great those people who didn't have income taxes (like Tennessee). Be sure to check which is higher.

Second: The reason the $8000.00 refund mentioned a couple of days ago is often changed is a nasty little rule called Alternative Minimum Tax (AMT). Way to confusing to explain for a friendly discussion, but often effects middle class families on the high end, not the rich as it was intend so many years ago!

Third thing: I understand all of you who prefer Uncle Sam to a savings account, but it isn't just a matter of wasted interest. That extra money might make great Disney vacations, but it really is not working for you in the long term. Of course it is your money and you should use it in the way that works for you. I offer for this your consideration: Reduce your refund by a small portion... maybe 600 to 1200 per year. Use this money to add extra principal to your mortgage. An extra 100.00 per month on a mortgage can cut many loans by years, even in half. Or put the money into a retirement account. Or course there is the perfect answer. Buy more points from DVC!!!


Final- GoofyDad. Don't worry about what you claim on your paychecks verse what you actually do on the return. It makes no difference to the IRS (unless you do something extreme-like 10 deductions etc) The information is just a math formula so that your employer can determine the correct amount of withholding for your life. They are not submitted to the IRS unless they do fall in on the extremely rare situations outlined in Publication 15. You set the level where you want, the only figure that matters is on the return.

I hope this helpful!

 

[CajunDixie]

So hear it goes: I work at Internal Revenue. (pLease don't hate me, I am in the fix problem area!)

We won't hate you.......although we may pester you to death with tax questions.