woohoo! taxes oh ya!

[newholidayx2]

just came from having our taxes done
and 2/3rds of our tax return is enough to cover 5nights Pop, 3nights WL and our food for 2 wks!

(maybe its time to upgrade? or plan a return w/those APs?!)

 

[HM]

Good for you!

But, here's what I don't understand. Why in the world were you guys letting the government hold your money for you all year, when you could change your deductions and get that money in your paychecks each month and save (and make interest) on it yourself?

-HM

 

[newholidayx2]

I was thinking the same thing - 1 of us isnt having the right % taken out
However it's awfully nice to get a big lump sum so it can be used for something big!

 

[canwegosoon]

I'm waiting for mine too Mine is almost 7K....last year it was 12K. I have a really hard time guessing how many deductions we sould claim and walk away even at the end of the tax year. So I know we're giving up Intrest, but I don't want to worry about it. I just try to make sure our taxes are done at least 1 month prior to our next trip. The 06 trip will be hard to do before. But hey my money!!!

 

[georgina]

I'm the opposite. I'm proud of the fact that I have to pay $1400 this year because I kept that money away from them for the whole year. It is difficult to judge withholding, but you only have to have the amount of your total tax bill the year before withheld to avoid penalties.

 

[lajones81]

I got a lot of money for my trip! Yeah!

 

[mom23boys]

My taxes are also going towards my trip in August, and for my Real Estate Taxes. We are getting around 8K this year back.

My DH makes commissions, and those checks are taxed so high. His regular paychecks hardly have any federal taxes come out. I wish I could have that money every month, but we just cannot do it.

Sharon

 

[fourfoxesinpa]

I'm waiting for mine too Mine is almost 7K....last year it was 12K. I have a really hard time guessing how many deductions we sould claim and walk away even at the end of the tax year. So I know we're giving up Intrest, but I don't want to worry about it. I just try to make sure our taxes are done at least 1 month prior to our next trip. The 06 trip will be hard to do before. But hey my money!!!

$7K times 2.6% ING interest = $182 extra. That'll buy a whole lot of Mickey Bars. Most people choose to get a big refund because they say they're not disciplined enough to put the money aside. For those folks, you could consider a direct deposit from their checking to ING on a regular basis. You wouldn't "see" the money plus, with the 2 or 3 days that ING would need to get your money back to you, it would eliminate the spur-of-the-moment spending that hampers saving.

 

[nicknamy1996]

On that example (and if I'm doing my math right) the interest would actually only be about $85. And you'd have to pay about 30% of that back in taxes.

So it's more like $60 lost. Don't get me wrong, sixty bucks is still sixty bucks, offer it to me right now in cash (or paypal if you prefer) and I'll take it. But to some people including myself (I guess I lose about $25 to $30 per year by letting uncle Sam keep my money) for any number reasons it's worth it.

 

[doubletrouble_vb]

My first thought was whaddiyamean its only $85 but of course you are putting in the 7,000 over the course of a year.

Despite that I'd have to agree that with that big of a return I'd go with an adjustment on what i'm paying Uncle Sam and get the refund down to plus or minus $1,000.

 

[fourfoxesinpa]

Maybe I'm doing my math wrong, but this is how I figured it out...

10% of $7,000 = $700
so 1/2 of that or 5% of $7,000 = $350
so 1/2 of that or 2.5% of $7,000 = $175

so, 2.6% of $7,000 does equal $182 interest lost for the year if you give it to the IRS instead of stashing away in an ING acount.

If you'd invest that $182 in an IRA or 401(k) plan, you could avoid taxes and it would be worth a whole lot more when you retire. If you've maxed out on your retirement plan and it does gets taxed as interest at 30%, you'd still be left with $127.00. With our budget, that pays for a month of cable, gas, and electric. Definitely worth it for us to have an automatic deduction out of DH's paycheck sent to ING and not touch it than to loan it out. Works better for us than to earn no interest but everyone is different. That's what makes the world go 'round.

 

[Savin4Disney]

I go to www.paycheckcity.com to figure out my deductions. This year I got back about 1000 with fed and state. Last year I owed the feds 10.00 and got back 400 plus from state. My goal is to break even every year too.

 

[curlyjbs]

We average about $2700 on our return each year. I wouldn't even notice that little amount in paycheck each week. Let the gov hold it...........I like getting the tax check! We don't use it for vacation though..........we buy stock with it.

~curly

 

[BethR]

Maybe I'm doing my math wrong, but this is how I figured it out...

10% of $7,000 = $700
so 1/2 of that or 5% of $7,000 = $350
so 1/2 of that or 2.5% of $7,000 = $175

so, 2.6% of $7,000 does equal $182 interest lost for the year if you give it to the IRS instead of stashing away in an ING acount.

You are right IF you are starting out with $7000 and it is in your account for the entire year. But that is not how it would work. Let's say you are paid by the month. 1/12 of the $7000 refund would be $583.33. Only that amount would get 2.6% for the year. You would add $583.33 to the account every month, but you would get 11/12 of 2.6% (if there is no compounding) for the 11 months. And in the third month you would deposit $583.33 but only get 10/12 of 2.6% for 10 months.

I know that I have not explained this very well, but you cannot take your whole refund amount and say that you would have gotten 2.6% on the entire amount for the entire year.

 

[WDWlover]

But, here's what I don't understand. Why in the world were you guys letting the government hold your money for you all year, when you could change your deductions and get that money in your paychecks each month and save (and make interest) on it yourself?

-HM

In response to this....I know personally, I would spend the money if it's available through my paycheck I am SO bad with saving it's not even funny LOL...This is why every time we get a couple hundred dollars saved up, we're sending it to WDW for our vacation to get it paid off quicker

 

[fourfoxesinpa]

I didn't consider the compounded interest so my $182 isn't correct. I agree that it is less. But, regardless of the amount, to me - it's still money lost to pay bills, invest in Disney stock, put in our IRA or 529 account for the kids. It's like sticking $7,000 under the bed in a shoebox and getting nothing in return - a financial advisor would never tell you to do that. Gosh, a $7,000 refund is (before taxes) almost $600 a month. To me, that just seems like a whole lotta cash to have it not working for you. We all work so hard for our money. I just find it ironic that this is a "budget board" where we talk about saving dollars and so many are content to lose money. But, like I said, everyone's saving/spending habits are different and you have to do what works for you and your budget.

 

[aka-mad4themouse]

In response to this....I know personally, I would spend the money if it's available through my paycheck I am SO bad with saving it's not even funny LOL...This is why every time we get a couple hundred dollars saved up, we're sending it to WDW for our vacation to get it paid off quicker

At least you know yourself well enough to admit this! I know that if the money is in my checking account, it gets spent. If I move it to a savings account, it gets saved and I don't think twice about it.

Since we're self-employed, we pay quarterly taxes. There's no way that I would sent the IRS a check every 3 months knowing that I was going to get a large sum back later. (Plus, there are penalties for grossly over-paying your quarterly taxes. Uncle Sam doesn't like to give refunds.) I have to force myself to save no matter how much discipline it takes.

 

[canwegosoon]

Thanks everyone for trying to come up with an amount I am missing out on...but for me it's really ok. I have have worked for the IRS, so I know the down sides. But when I get the check... I love it...I live well within my means, so the monthly take home additional $250 in my mind is something I would burn. The reason why I have a high tax return is of my investments (own rental property) and we sacrifice monthly to pay for those investments. Getting the large check, we know will go toward our vacations and other big ticket item. Yes in my case I use it as forced spending...IMHO well worth the $80-180. I always seem to spend what I have, if I had that extra $250 I would be looking at other ways to invest it making our resources even tighter. Just don't want to do that!

 

[nicknamy1996]

Thanks Beth, I should have explained myself better. That was my point, you start with $0 not $7000. But if you do invest your $85 dollars to avoid taxes(actually just delay taxes) on the interest you are not buying any Mickey bars with it anyway. Again don't get me wrong, if that's the way you prefer to do it... Go for it! $85 invested now(and year after year) will (hopefully) buy a lot of Mickey bars when you retire.

I'm only voicing my opinion because my brother always gives me trouble about it. My return is half of the $7k we've been discussing, so I could have invested about $40 for retirement this year. And personally for me it's not about the "work" to set it up and manage it. That would be no problem. I just like getting the big return.

Thinking about it... we have $100 per paycheck pulled out and put in to a savings account we use that throughout the year for this and that. But I would never call and say "send it all to me in a check!" So I would most likely do the same thing with my "tax" account. I would see that I saved 3k this year and I would never spend it. It's my money, in the bank, I'm not going to blow it. But if uncle Sam sends me a check whooo hooo! It's party time. And I also like doing my taxes and finding out then how much I'm getting back (it's like a little jackpot) Even if I had saved $4000 in my "tax" account it would not be much fun to do my taxes and see that I owe $1000 in taxes! And if you over adjust really bad you will have to pay what you owe plus penalty (don't know the details on that, just see it on the tax forms)

So my thing it do it which ever way you want, both have thier ups and downs. I say do what makes you happy, and the OP sounded pretty happy.

 

[anewvance]

Our tax refund is going towards our Disney trip this time around... whoo hoo, a trip I don't have to primarily ebay my way for!