Big tax refund!

vraiblonde

vraiblonde

Board Mommy
PREMO Member
Patron
:yahoo:

Now, here's the thing:

My first FIL used to get all kinds of bent about tax refunds. His take was that you're lending the government money interest-free. MY take is that those few hundred buck a month would get pissed away frivolously and not saved. But when you get a check for $10,000, THAT is real money and you'll put it in savings or make a major purchase with it (mine will go into savings).

Even if your refund is only a thousand or two, it's still a big fat check vs. the hundred or two you'd have kept each month and frittered away. Currently anyone could shave at least $50 off their monthly expenditures, and stick it in savings. But nobody does that - we spend what we make.

So why does it make any sense at all to get right on the dollar with your taxes and not overpay? Sort of like an enforced savings account.
 
R

rhenderson

Guest
From a strictly financial management point OP's FIL is right - why lend your money out for no gain? From a personal asset managmen point of view the OP may be right for the OP and many others. If you have the self discipline to save/invest that few dollars per pay check you do better keeping your withholding as low as possible. However, if you don't have that self discipline you may enjoy getting a larger return. Yes it can be considered a forced savings plan - but the individual is forcing it on their ownself. I've done it both ways. Bottom line - the "right way" for for one person may not be the "right way" for another.
 
desertrat

desertrat

0_0
I owe both about $500. Redid witholding and maybe next year will be closer.

I agree a $500 or so refund would be kinda nice. Let's face it, you aren't going to earn much on the money if you stuck in savings anyway. Plus what little you did would get taxed. If you are that far off doesn't that ring bells though? Or is it just if you owe too much?
 
vraiblonde

vraiblonde

Board Mommy
PREMO Member
Patron
desertrat said:
I agree a $500 or so refund would be kinda nice. Let's face it, you aren't going to earn much on the money if you stuck in savings anyway. Plus what little you did would get taxed. If you are that far off doesn't that ring bells though? Or is it just if you owe too much?
Click to expand...

There's that, too - interest earned, which is :yawn:

My income is weird because I am an employee of a business that I also own stock in, and who knows what basis and dividends are going to be for the year. There's no real way to guesstimate, and I can't think of anything I'd hate worse than having to write a big ol' check to the IRS and Comptroller. So I withhold extra just to make sure I'm covered.
 
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