I don't get it.....

[Robinrs]

A savings account pays just about nothing in interest these days. Nothing. If you aren't great at saving & budgeting, getting a big tax return is a great way to save up for a big purchase, and you really aren't out a thing, other than the $3.09 you would have earned in a year on your money.

Can someone notate a savings account that you cannot touch for a year that has a substantial interest? Or is it better to have an extra few dollars a paycheck that you barely notice?

I haven't had a refund in EONS but did receive one last year due to the small business I have and the fact that I take care of my uncle and my son is still my dependent. It was wonderful to receive because with my budget there was no way in heck I would've saved that money!

And why should the EIC bug you? Because you don't get it? I don't either but it never bugs me that people who need something get help. Unfortunately too many people could care less as long as they're alright. I'd rather waste my time being mad about people with TOO MUCH getting tax breaks.

 

[RitaE]

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.

 

[Lorelei Lee]

Had my taxes done by a new accountant this year. He does not subscribe to the idea in the original post, i.e., that it's always better to get the money in hand during the year than to get a significant refund.

It depends on what kind of deductions you have, how much money is involved and whether the money would make a significant difference in you day to day life.

I trust his expertise, he's been in business for over 40 years.

 

[Pixiedustaway]

I understand how the system works. I know we are not getting "free money". We have it set up as what works best for us. As I'm assuming the rest of anyone that gets a refund.

 

[sonnyjane]

I don't get it. What's with all the dumping on people for how they choose to manage their finances, whether this new thread or your other government aid thread?

In some cases, people may purposely do this because, for them it is an easy way to save and get a nice lump sum every year. Maybe they prefer to do this, rather than put $50 or $75 into a savings account each week. It doesn't mean the government is fooling you somehow, or that you are dumb financially.

But it seems to make some people feel better by criticizing the way other people manage their money. I think you shouldn't be judging people as carelessly as you have been doing.

I agree. I do find it fairly insulting that it's insinuated that people who choose to get a refund don't understand the process or finances in general. I'm very much aware of how refunds work and have my finances very much in order. My choice to get a refund each year does not make me financially uneducated.

 

[Handbag Lady]

Exactly!!! It's a great way to save for something big w/o being aware of it. After all, when you have an extra $50-$100 on a check are we really socking it away? Or, are we using it to treat our family to pizza and a movie, an unexpected repair, extra groceries, the list goes on. I am fully aware the government is getting my money up front w/o interest but it's nice to expect that refuse for those huge vacations or purchases that are otherwise being put on hold.

I use that extra money for my 401k contribution. I am just obsessed right now with numbers and I know I don't have enough in my 401k to where I should be, but again, that is just me and how anyone else wants to handle their money is their own business.

I'd glad that most of the people here getting refunds know it is their own money and understand how that works. On the streets and in my extended family, that comprehension is just not there. I see those same people struggling check to check.

 

[manning]

I agree. The financial knowledge in this country is sad, very sad.

What do you mean? The youngsters have boiled it down to the simplest form....spend spend spend. Too complicated to save save save.

Then they say "I don't get it...I'm broke."

 

[kkandaj]

I don't get it. What's with all the dumping on people for how they choose to manage their finances, whether this new thread or your other government aid thread?

In some cases, people may purposely do this because, for them it is an easy way to save and get a nice lump sum every year. Maybe they prefer to do this, rather than put $50 or $75 into a savings account each week. It doesn't mean the government is fooling you somehow, or that you are dumb financially.

But it seems to make some people feel better by criticizing the way other people manage their money. I think you shouldn't be judging people as carelessly as you have been doing.

I agree completely with this. I don't get why you are so concerned with everyone else's finances.

 

[DizBelle]

Can someone notate a savings account that you cannot touch for a year that has a substantial interest? Or is it better to have an extra few dollars a paycheck that you barely notice?

I haven't had a refund in EONS but did receive one last year due to the small business I have and the fact that I take care of my uncle and my son is still my dependent. It was wonderful to receive because with my budget there was no way in heck I would've saved that money!

And why should the EIC bug you? Because you don't get it? I don't either but it never bugs me that people who need something get help. Unfortunately too many people could care less as long as they're alright. I'd rather waste my time being mad about people with TOO MUCH getting tax breaks.

It just seems so, so wrong to get back in a refund more than you paid in taxes. If you paid $1500 in taxes during the year, you could get a refund of $6000 due to EIC. Where do you think that $4500 comes from? It comes out of other tax payers pockets.

 

[bcla]

I understand it when you're talking about $1,000 even $2,000 or so but I hear of people getting $5,000-$8,000 and much more back without significant life changes that would affect a tax refund. That's a lot of money which I think would be missed or better served being invested in a retirement plan or something other than a savings account.

I've tried to minimize withholding, but there are certain things that force high amounts of withholding that I can't really control.

One is bonuses or other lump sum payments. I remember once I had severance due to me and HR suggested taking it in payments. However, I can't control the bonuses. They come as a lump sum. And sometimes several different bonuses at the same time. The way they're withheld is that they're calculated for what my tax burden would be if I got that payment every period over the entire year. So I get my regular paycheck. Then I get a bonus on top of that. But what comes out of the bonus is a higher proportion. The additional withholding is calculated as if I get my regular pay and bonus for the entire year.

 

[petrymom]

Exactly. Most people won't even notice an extra $20 in their check. But if you get $1000 in a lump sum you can use it for something "extra".

Couldn't have said it better!!!! I know I am not supposed to use Uncle Sam as a savings account, but it works for me. Has all my adult life.....

 

[Jennasis]

Cause it's better than owing?

 

[mco65]

Cause it's better than owing?

Touche`

 

[sonnyjane]

I use that extra money for my 401k contribution. I am just obsessed right now with numbers and I know I don't have enough in my 401k to where I should be, but again, that is just me and how anyone else wants to handle their money is their own business.

One could just as easily start a thread about the disbelief that some people don't have enough money in their 401k to retire. Why didn't they start sooner? Why didn't they contribute more? They must not understand the importance of retirement. "I don't get it..."

As you just said, how others handle their money is their own business.

 

[Robinrs]

It just seems so, so wrong to get back in a refund more than you paid in taxes. If you paid $1500 in taxes during the year, you could get a refund of $6000 due to EIC. Where do you think that $4500 comes from? It comes out of other tax payers pockets.

My taxes pay for LOTS of things I don't agree with, more than I can list here. I can't control that but I don't sit around resenting it or posting rants about it, either.

 

[okeydokey]

We currently use tax returns to pay for the kids' summer camps.

We have two retirement accounts and a pension building. We have two other savings accounts, and college accounts for the kids. We pay off credit cards every month. We are not financially stupid. This works for us, but thanks for your concern.

 

[snapppyd]

What do you mean? The youngsters have boiled it down to the simplest form....spend spend spend. Too complicated to save save save.

Then they say "I don't get it...I'm broke."

Generalize much?

 

[MSLRAC]

Cause it's better than owing?

Exactly! DH and I work commission based jobs and hover between two brackets. We have our income taxed at the higher rate (and then some) just in case because we owed thousands in 2012. We should be solidly in the higher bracket this year but we still have the extra taken out just because I never want to experience the sickening feeling of owing again. We don't miss that money each month and I had our refund this year go straight to our Disney account.

 

[tina.tina]

Maybe the OP knows a person like my sister. Her DH has WAY too much withheld from his check. They got back $8,000 this year- NOT EIC. Plus, they struggle to pay bills each month and sometimes get cash til payday loans or borrow money from their parents. Interestingly, my sister actually works for H&R Block doing taxes!!!! I've talked to her about it several times and she says she likes it like this!!!!!

 

[Cannot_Wait_4Disney]

Why are people all "Whoo dee doo!!!!" over getting a tax refund when it could have been their money all along if they had their withholding done properly? .

Actually, it is possible to do witholding properly and get a refund. To end up at exactly zero is a fluke that is rarely accomplished except by those that paid nothing, and owed nothing. And sure we're going to celebrate when we get a refund. It beats owing more hands down.