I don't get it.....

[lakelandgal70]

Never ever got it either OP. Our tax guy says he doesn't get it either lol

 

[Mickey Fliers]

I don't get it….I thought it was "whoop dee doo".

 

[Philagoofy]

I don't get it….I thought it was "whoop dee doo".

It is, unless you're using the refund for a Disney trip then it's "Hoop-dee-doo"!

 

[snapppyd]

It is, unless you're using the refund for a Disney trip then it's "Hoop-dee-doo"!

 

[mjkacmom]

We do this (and DH has an MBA, and is a CFP, and basically advises people on what to do with their money). I'm in charge of the day to day finances, and I like this forced savings account. I agree with many here - it's not like you are gaining much interest in bank accounts.

We also have a money market account that money is direct deposited into each month - and I have access to that money... Honestly, I can't see the harm of having some money be untouchable for a year (if you don't really need it). I would hate to be in a financial situation where not having an extra $7000 would kill us.

 

[JanaDee]

We do this (and DH has an MBA, and is a CFP, and basically advises people on what to do with their money). I'm in charge of the day to day finances, and I like this forced savings account. I agree with many here - it's not like you are gaining much interest in bank accounts.

We also have a money market account that money is direct deposited into each month - and I have access to that money... Honestly, I can't see the harm of having some money be untouchable for a year (if you don't really need it). I would hate to be in a financial situation where not having an extra $7000 would kill us.

You get a $7,000 refund?

 

[KalamityJane]

I take the extra money and put it into stocks, not a bank account. I'd be losing out on anywhere from 5-10% if I let the IRS have it all year.

 

[CdnCarrie]

Doesn't matter to me how people choose to get their money .......one lump sum or not over paying the tax man monthly.

What really does baffle me about the USA taxes is that people can get back more then what they paid in for taxes as that never happens here. There is just no way you can get more back then what you paid in............guess its due to claiming all those credits that are talked about and we must not have them. No matter what your income is you owe some kinda tax money to the government so even with the credits we are allowed you don't get it all back.

That happens in Canada too. I know one family in particular who tells me they get back more than they paid in taxes.

 

[canadianjovigirl]

That happens in Canada too. I know one family in particular who tells me they get back more than they paid in taxes.

Really.......I asked our accountant and he said it wasn't possible because in Canada the tax credits for lower income increase the child tax benefit and the working employment tax.

My 19 year old works lives on her own and makes about $15,000 a year and even she does not get all that she paid into taxes back and the accountants explanation is that everyone pays something into taxes if they work - the only difference is the percentage and the deductions which cannot bring it down to zero.

I may have to consult a new accountant and ask a few more questions, not that it will make a difference for us but for her it sure would being on her own and low income.

 

[EveDallas]

Don't forget that if anyone has not signed up for the healthcare plan, they can take the penalty from your tax refund. It won't add up to much this year since the sign up deadline is 3/31. In:
2014 = $95 per person per year or 1% of your Income
2015 = $325 per person per year or 2% of your Income
2016 = $695 per person per year or 2.5% of your Income
2017 = Tax Penalty will increase by the rate of inflation going forward, or 2.5% of your Income
This is not meant to be political but just information some may not know. It may or may not influence people who use refunds as a form of savings.

This isn't true for everyone. There's a whole list of exemptions. https://www.healthcare.gov/exemptions/

 

[CdnCarrie]

Really.......I asked our accountant and he said it wasn't possible because in Canada the tax credits for lower income increase the child tax benefit and the working employment tax.

My 19 year old works lives on her own and makes about $15,000 a year and even she does not get all that she paid into taxes back and the accountants explanation is that everyone pays something into taxes if they work - the only difference is the percentage and the deductions which cannot bring it down to zero.

I may have to consult a new accountant and ask a few more questions, not that it will make a difference for us but for her it sure would being on her own and low income.

I don't know all the details. I think much has to do with having children with disabilities in their case.

 

[lacrosse_lady72]

I don't really understand the point in making people feel lesser than you for their financial choices. I know exactly what I'm doing when it comes to my withholdings.

I ask for them to hold an extra $100 each paycheck because then every February, I have about an extra $2600. I know that it's my own money and I really don't care that I loaned it to the government for free. I choose to do this simply because if I had received it in my paycheck, I would spent some or all of it. Since it's taken out automatically, I don't really think it exists until I get it. I don't rely on it. I don't factor it into my regular savings. I also don't have a choice, it's just taken out.

It's fun to just be given $2600, even if it's already yours.

 

[rickybobby]

This isn't true for everyone. There's a whole list of exemptions. https://www.healthcare.gov/exemptions/

Oh my gosh, that is a lot of exemptions. Some would call this more loopholes. It can be manipulated.

 

[Colleen27]

I can tell you that in my case I've thought I had my withholding fairly well under control and then I got smacked with the AMT or something and ended up with an unexpected $5000 bill due in April. Given a choice between a year like that and the fun of getting to plan how to spend a refund check …. I'll take the interest free loan any day of the week.

This is us too. Not the AMT but an unexpectedly strong year for our business meant owing a significant chunk in self-employment taxes. Not everyone has the straightforward one job, one withholding rate situation - DH has W2 income, 1099 income, and business income that we self-report because it isn't subject to any forms. I'd rather over-pay during the year and get something back than under-estimate and have to scramble to come up with a lump sum at tax time. The business is seasonal with winter as our annual low point so that tax bill comes at the worst possible time of year and I do my best to avoid owing all together.

 

[sapdaddy2]

Unless the people with the large refunds (of which I am one) are paying CC's interest (which I am not) --- which could be reduced if they received these $$'s during the year

We were visiting my SIL and her husband last week and she said that they were having a "discussion" on what to do with their tax refund of $2,500.00. She wants a trip to NYC because she never gets to go on trips, he wants to use it for paying down their CC bill of over $8,000.00.

My advice was go on your trip and have fun but tomorrow go and change your withholdings so you get more in your paycheck. Since you have online banking have the bank automatically pay the difference in your amount to your CC bill every week but keep paying the amount you usually do once a month. My SIL didn't like that idea because "We won't get much of a refund next year" I tried to explain you would be saving $$ on interest but she didn't want to hear it.

 

[Scornelius]

Really.......I asked our accountant and he said it wasn't possible because in Canada the tax credits for lower income increase the child tax benefit and the working employment tax.

My 19 year old works lives on her own and makes about $15,000 a year and even she does not get all that she paid into taxes back and the accountants explanation is that everyone pays something into taxes if they work - the only difference is the percentage and the deductions which cannot bring it down to zero.

I may have to consult a new accountant and ask a few more questions, not that it will make a difference for us but for her it sure would being on her own and low income.

I think the federal exemption level is just under $10k, and then there are provincial levels too. So it is absolutely possible to pay zero, and that's before any deductions or credits. You will still pay EI and CPP, but no tax . And while you may not get a refund beyond your contributions, with an income that low you will likely qualify for the GST credit, Trillium Grant, or similar programs that can pay out either several times a year, or once at tax time. Toss a disabled dependant into the mix, and you could be eligible for a large amount. I think your accountant is giving you a very lazy answer.