Taxes.... I'm not getting something

[rockundergirl]

I got back almost 3 k this year and I'm super annoyed. I claimed 1 and should have claimed 3. That means that the gov't was holding onto my money that I could have used for savings/ fun/ bill pay etc.
Reading around on the boards and also talking to my friends I hear so many people really happy that they are getting crazy amounts like 8 K, 5 k etc. back in taxes.
So what am I not following? Isn't it bad if you had to wait all year to get your money?

 

[Marionnette]

I got back almost 3 k this year and I'm super annoyed. I claimed 1 and should have claimed 3. That means that the gov't was holding onto my money that I could have used for savings/ fun/ bill pay etc.
Reading around on the boards and also talking to my friends I hear so many people really happy that they are getting crazy amounts like 8 K, 5 k etc. back in taxes.
So what am I not following? Isn't it bad if you had to wait all year to get your money?

Yes, it's better to get your money in your paycheck than it is to let the government have an interest free loan.

But some people get back more than they paid into taxes. Those people do not get that money until they do their taxes and a refund check is sent.

 

[preschoolmom]

In a word, yes. It is bad financial planning to allow the government to hold your money interest free all year long - and then return it to you like a gift in a lump sum in Feb/Mar.

It's basically how the government confuses people into thinking they aren't paying taxes. If everyone had to save the money and pay their own tax bill each year - they might view taxes and government programs/spending quite differently.

We are supposed to get a very large return this year - and I was mortified! I already had my DH run to HR and change his W4 for this year. I can't wait to have his whole check each month throughout the year!

 

[lemonsours]

One other thing to consider is that if some people got that money in their paycheck, it would have been spent immediately. Some people purposely have more taken out as a way of enforced savings.

 

[PrincessKsMom]

We get a big refund every year and I prefer it that way. Honestly, if I had that money I'd blow it throughout the year. We always used the money to pay for DD's school tuition for the following year. It was almost like a forced savings plan and I couldn't get my hands on the money if I wanted to. Just works better for us this way.

 

[scrapquitler]

I got back almost 3 k this year and I'm super annoyed. I claimed 1 and should have claimed 3. That means that the gov't was holding onto my money that I could have used for savings/ fun/ bill pay etc.
Reading around on the boards and also talking to my friends I hear so many people really happy that they are getting crazy amounts like 8 K, 5 k etc. back in taxes.
So what am I not following? Isn't it bad if you had to wait all year to get your money?

It depends on your perspective. Some people are happier to have the extra money in each paycheck all year long. Other people like to get that lump sum during tax season because it's like a forced savings plan.

I agree with you, I try very hard to come out as close to 0 at the end of my tax return as possible. I don't like to pay ahead and give the government a free loan, I'd rather have the use of my own money throughout the year.

 

[delmar411]

I got back almost 3 k this year and I'm super annoyed. I claimed 1 and should have claimed 3. That means that the gov't was holding onto my money that I could have used for savings/ fun/ bill pay etc.
Reading around on the boards and also talking to my friends I hear so many people really happy that they are getting crazy amounts like 8 K, 5 k etc. back in taxes.
So what am I not following? Isn't it bad if you had to wait all year to get your money?

Our refund is OPM so no we couldn't get it during the year. We paid $24 in federal taxes this year and are 'getting back' just shy of $11k from the feds.

 

[StitchandPooh'sMom]

We are getting a larger than normal refund this year, I think due to us having an HSA for the first time and also just the normal variability of investments/capital gains/etc. - those change a bit from year to year. It's hard for us to get it exactly right since we itemize and those values vary some. My goal is to get enough back in federal to pay state (since we almost always owe the state). This year, we are even getting a small refund from the state. DH's income and the taxes we have withheld are fairly constant from year to year - it's all the other stuff that varies and really determines how much we will get back or owe.

I don't like getting back a huge amount, but I especially don't like owing money!

 

[ljcraw555]

Our refund is OPM so no we couldn't get it during the year. We paid $24 in federal taxes this year and are 'getting back' just shy of $11k from the feds.

What is OPM?

 

[n2mm]

I never give the USG an interest free loan. I try to break even every year. I guess I'm more discipline than others as I have a direct deposit into my regular savings account and my vacation savings account. I haven't even thought of doing my taxes yet, maybe in March...dunno. I always thought it amusing how folks don't care that the USG has their money, but as soon as tax time rolls around, they want it immediately, when they could've had it every month if they wanted.

 

[delmar411]

What is OPM?

Other People's Money.

It was tongue in cheek. We qualify for an absurd amount of refundable credits so it's not our money being returned to us.

 

[Ava]

Last year I got back almost $3K from Federal & almost $900 from state - that was a huge refund for me, and it happened because DD was born in April 2009 & I didn't change my witholdings. I'd never claimed a dependent before so I wanted to see how I made out before I changed anything. I did change them after I did my taxes & saw how big my refund was; like you, I'd rather have my money throughout the year. I haven't done my 2010 taxes yet but hopefully I didn't go too far in the other direction & end up owing. My pre-tax witholdings also went up in 2010, so my taxable income is actually a bit less than last year. I'm hoping for a small refund - as long as I don't owe I'll be happy!

 

[rockundergirl]

Yes, it's better to get your money in your paycheck than it is to let the government have an interest free loan.

But some people get back more than they paid into taxes. Those people do not get that money until they do their taxes and a refund check is sent.

How can you get back more than you paid?

 

[Ava]

How can you get back more than you paid?

Refundable tax credits. These credits can reduce your tax liability to below $0, effectively giving you back more money than you paid in in taxes. Examples are the Earned Income Credit, First-Time Homebuyer Credit, & Making Work Pay credit.

 

[Lisa loves Pooh]

You are supposed to narrow it down to where you are refund/payment neutral....i.e. either get back very little or owe back very little.


As for people who are excited, they likely keep it that way out of lack of discipline. Some folks know they will just spend the money. So even though they get no interest on it, it is a way for them to save money and not miss it.

Savings accounts tend to have a pitiful interest rate, that over the course of a year, the 1% they would have gotten on $8,000 isn't worth the temptation.

Additionally, some folks have tax credits--my BIL and his wife got the new buyer tax credit. Until the house is closed, this is not a guarantee. They did close on the house and moved in August or September. By then, there is no way they could have done much by way of adjusting their W-4 to account for that.

I'm jealous of their refund. We bought a house--but it wasn't our first time and we weren't going to be able to sell our old home for a partial credit.

We do however get a $500 credit for a door we installed on our old house. It at least cuts down what we owe a little bit.

 

[4HppyCamprs]

Ordinarily it is better to get more back in your paycheck rather than getting a big tax credit but you cannot get your child tax credit in your paycheck, we could not get our energy credit for installing a furnace back in the paycheck or our education credits in our paycheck so we did get a large for us refund but it is because of credits not overpaying. No earned income credit here...

 

[indimom]

I generally hope I'm getting some sort of return. BUT, I don't do it for enforced savings.
I run my own business and it's difficult to estimate my taxes on my own. So, rather than pay an accountant an obscene amount of money to figure my quarterly payments, I pay a straight percentage of my income (without taking out any expenses), which generally results in getting "something" back at the end of the year.
One year I tried figuring my quarterlies myself and ended up paying in. I didn't like it, so I won't be doing that again. I didn't like owing $2,500 at tax time, and it's scary to think that I could get further off than that. So, I'll just keep overpaying and getting some sort of return.

 

[allison443]

I never give the USG an interest free loan. I try to break even every year. I guess I'm more discipline than others as I have a direct deposit into my regular savings account and my vacation savings account. I haven't even thought of doing my taxes yet, maybe in March...dunno. I always thought it amusing how folks don't care that the USG has their money, but as soon as tax time rolls around, they want it immediately, when they could've had it every month if they wanted.

I agree with the bolded! I have noticed that too!!

 

[Acklander]

It used to be better to get your money as you go along however interest is so small right now, I don't think it makes that much of a difference, so I wouldn't beat myself up over it.

 

[dhardawa]

It is very much a personal choice. I have gotten huge tax refunds the past two years due to the adoption credit for my son. Next year, it won't be as much and I have loved getting that large amount back. So, I actually went and changed my withholdings to take out a little more so I'll get a larger refund. At the current interest rate, I'd rather have the joy of a big return than an extra $6 in interest.