Help me explain taxes to DH

[bumbershoot]

Your friends that are "bragging" about the size of their refund are poor money managers.

Let's say you and a friend both owe another person $10. You pay the $10 but your friend accidentally gives the person a $20. A few months later, the person realizes your friend gave him $10 too much and gives your friend the $10 he overpaid back. Your friend goes around waving the $10 in the air hooting and hollering that he just got $10 and you didn't. Bottom line, you both paid $10 and your friend is fooling himself that he got something for "free" that he didn't.

DH has a very small business ...

Well that's your answer. Since he has a business, he's paying the SS on his own, and no one is magically keeping taxes from his paychecks like if someone else gives you the paycheck. When I had my business it was the SS payments every year (I was stupid and never was able to start with the quarterly taxes even though I knew that I was supposed to) that got me. It's much nicer when a big company is doing it for me and paying some of it for me as well.

 

[crisi]

I am an accountant who specializes in small businesses and prepare a lot of returns. I suspect that Americans are the same as Canadians and don't always tell the whole truth. I have had clients ask me why another client got so much back or how come they don't pay as much as them. The reasons are varied but usually people inflate the situation to others to sound good. They like to brag.

What? People lie about the size of their refund? NO!

I think at this time of year people make splurge purchases. Then, because for some reason we feel the need to justify it to others, they like to say "well, we got a nice refund."

 

[punkin]

What? People lie about the size of their refund? NO!

I think at this time of year people make splurge purchases. Then, because for some reason we feel the need to justify it to others, they like to say "well, we got a nice refund."

People lie about the size of their [INSERT NOUN HERE]!

 

[bettymae1121]

A lot of people don't understand taxes. DH heard co-workers complaining about how taxes went *up* this year. DH told them "no, Federal taxes actually went down, why do you think taxes went up?". He said they all answered "my refund was lower than last year, so I must have paid more in taxes..." He tried to explain how the size of your refund going up or down doesn't by itself mean you paid more in taxes, but they didn't believe him.

 

[tzolkin]

The people getting money back don't have a "secret" that is letting them pay less in taxes. You are paying the same as another family with the same number of people and taking the standard deduction.

Let's say you and a friend both owe another person $10. You pay the $10 but your friend accidentally gives the person a $20. A few months later, the person realizes your friend gave him $10 too much and gives your friend the $10 he overpaid back. Your friend goes around waving the $10 in the air hooting and hollering that he just got $10 and you didn't. Bottom line, you both paid $10 and your friend is fooling himself that he got something for "free" that he didn't.

This is exactly how I try to explain this. Unfortunately some people just can't get the concept.

I did my brother and sister's taxes a few years ago. They made the same amount of money, both single. My sister had done substitute teaching at almost 10 schools and none of them withheld any tax. (I don't think her other jobs were withholding properly either.) She was furious that my brother got a return and she owed money. In her mind he was getting "free money" and she was paying "extra" taxes. In reality they paid the exact same amount to the government, he just paid a bit too much and spread his payments out over the course of the year and she paid hers all at once.

 

[thebeesknees]

DH just says the reason he doesn't want a big return is because that would me he had essentially just given the government an interest-free loan on our money. We'd rather have it in OUR bank earning interest, than sitting with the government making 0% all year.

 

[jmartinez1895]

On a side not, does anyone else find it kinda funny when you file your taxes and if you get a refund you get a post card ( or at least in AL we do) that says, you over paid your taxes this year.....ummm, No you took to much...lol

 

[SOnotLayuh]

I've learned a lot from this thread!