Tax withholding question

[npmommie]

I was just reading an article on Kiplingers about increasing your withholding allowances so you have more money in your paycheck instead of a large refund at the end of the year.
so what do you do? do you claim more allowances on your w4 or do you keep it low to get the big refund?

 

[Binnie]

I like getting a big refund, but DH prefers to come out even (or OWE!) at the end of the year. Something about not giving a loan to the government (ironic since he's AD military!).

In the end, we use his strategy. I hate having to pay, tho. This year, it looks like I might get the best of both worlds... a surprise refund!

 

[manning]

I like getting a big refund, but DH prefers to come out even (or OWE!) at the end of the year. Something about not giving a loan to the government (ironic since he's AD military!).

In the end, we use his strategy. I hate having to pay, tho. This year, it looks like I might get the best of both worlds... a surprise refund!

Having the government hold your money is like putting money into a bank and not getting any interest.

 

[Golf4food]

Having the government hold your money is like putting money into a bank and not getting any interest.

Like burying it in a jar in someone else's back yard and letting them use it all year as long as they give you back the same amount at the end of the year - without any extra for your trouble.

Think about it: if you get back an average of $2,000 tax refund every year that is over $160 PER MONTH you are missing out on. Got credit cards you need to pay down? Got a vacation coming up? Got a house to save for? Change your W-4 and get that money in your pocket up front and use it for something good instead of letting Uncle Sam use it interest free all year (especially if you have debt you need to pay off - you lose twice by getting zero interest on your extra taxes and then paying interest on the debt!).

I was fine owing $300 last year. Haven't done this year's yet. I once got a refund of $7.00. Yep, seven dollars. I did a little dance.

 

[aprilgail2]

I don't care about getting extra in my pay each week, I don't mind letting the government use my money for 12 months- I still prefer to get 6000-7000+ back in Feb each year to pay off summer camp, vacations we take in the summer etc....

 

[kirbsam]

I don't care about getting extra in my pay each week, I don't mind letting the government use my money for 12 months- I still prefer to get 6000-7000+ back in Feb each year to pay off summer camp, vacations we take in the summer etc....

i will never understand this mentality. i know we are all entitled to our opinions, but this just doesnt make any sense at all. it is like you are throwing away money every single year.

 

[mirmartinez]

I was just reading an article on Kiplingers about increasing your withholding allowances so you have more money in your paycheck instead of a large refund at the end of the year.
so what do you do? do you claim more allowances on your w4 or do you keep it low to get the big refund?

dh does zero.
however, a bank will gladly hold your money with interest

 

[OctMtnWoods]

Its only been the past 2 years that our refund has jumped to a large amount. I tried last year to get DH to change his withholding, but he liked the large refund. When he saw this years amount, and I pointed out how much per month that was, he finally agreed. Now I need to do my part and make sure that extra money each month actually makes it into the savings account and doesn't get wasted away on take-out food and junk.

 

[mirmartinez]

Its only been the past 2 years that our refund has jumped to a large amount. I tried last year to get DH to change his withholding, but he liked the large refund. When he saw this years amount, and I pointed out how much per month that was, he finally agreed. Now I need to do my part and make sure that extra money each month actually makes it into the savings account and doesn't get wasted away on take-out food and junk.

put it in a happy place like a disney fund

 

[Pakey]

We are of the same mentality; not going to pass up the chance to earn a bit of income for ourselves. I would never allow the government to hold my money all year and lose out on that. Of course, I am disciplined enough to save money on my own and who wouldn't want $6000 after a year instead of $5000?

 

[tasha99]

I think it's just personal choice. If you put it in the bank, you won't earn much interest. If you invest it, this year at least you'd probably lose money (that $5000 would likely be $4000.)

 

[Green Tea]

Having the government hold your money is like putting money into a bank and not getting any interest.

Isn't that just like putting money in the bank these days?

 

[Green Tea]

I don't care about getting extra in my pay each week, I don't mind letting the government use my money for 12 months- I still prefer to get 6000-7000+ back in Feb each year to pay off summer camp, vacations we take in the summer etc....

i will never understand this mentality. i know we are all entitled to our opinions, but this just doesnt make any sense at all. it is like you are throwing away money every single year.

The only person it has to make sense to is the person affected. I know there is no reason to get a big a big refund, in economic thinking. But I also know with the extra money each month, I would just spend it. Come March, I can get a lump sum of the 6000-7000 listed above back to put into savings, or I can get to March and wonder where the money went all year.

There is a right and wrong answer in a true sense, but in an emotional sense for many people, the answer is quite different. With interst rates so low currently, the draw of losing the year's interest isn't even so strong.

 

[MarkBarbieri]

I almost always owe. Last year I owed about $5,000. This year it will probably be even more. I like to get my money as early as possible so that I can put it to good use. It is true that my investments lost money this year, but that's unusual. I try to get my money as early as possible and pay as late as possible. Just be careful, if you owe more than 10% of your prior year's tax liability, you may have to pay penalties.

Back when my finances were more simple, I would do a trial run of my taxes in the summer. I could tell whether I would be over or under and then I would adjust my W-4 so that I would end up owing about $500. That worked well.

 

[AnnaS]

i will never understand this mentality. i know we are all entitled to our opinions, but this just doesnt make any sense at all. it is like you are throwing away money every single year.

I can understand - I am not saying that is what aprilgail does - but most people will spend that $100 $160 a week every week on nothing - they won't have anything to show for it. Most of us live according to that pay check every week and are not disciplined to save the "extra" few dollars - if any.

Having that sump lump once a year takes care of a lot of things (savings, trips, cc, etc.). They won't have anything to show for it the other way - not all, but most. I see people who say, oh that loan will be paid off in a month or so and I can do this (whatever that loan may be) and before you know it - the money they just saved - they don't have/feel it's extra anymore and can't afford anything all over again. I am not sure if that made any sense, lol.

I prefer being even with the government or just owing/havind a refund of a few hundred dollars here and there myself. But I definitely understand that mentality is my point

 

[PrincessKitty1]

We can only make an educated guess at what our taxes will be every year, since DH is self-employed. That said, I would much, much rather end up with a refund then end up owing money. I don't care if the government is using my money for the year....the pain of writing a $5000 check to the IRS at the end of the year is just too great.

 

[bicker]

For me, the objective is to avoid having to pay estimated taxes because of under-withholding. That's a PITA AFAIC.

 

[npmommie]

we always end up with a large refund, I am having hubby increase his withholding, right now he does 0

 

[Piecey]

DH makes about $3.50 more an hour than I do and works full-time...
I work part-time (or, 30-38 hours a week )... and I claim 0 and he claims 3, I think.
Other than a Savings Bond deduction ($50/check to get $100 I Bond a month) ALL the deductions come out of my check (Healthcare Spending, Dental Insurance, etc) so my checks are usually pretty crappy but more of our "play" money than anything.

It usually works out pretty well, we got some back from federal and state and can live very comfortably with what we're getting paid.

 

[Allison]

I want to come out as even as possible. I do not want a large refund.