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We make plans for it because we know we're getting a refund. We like to overwithold because its a PITA for us to owe (which has happened). So we use it for a special project. Although I like @rattles: plan of putting it into a college fund!
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We don't rely on it. The year we were married, I was still in school and my hubby had a large business expense, so we ended up with a huge refund. We've owed every year since. This year, we may end up with a refund due to having DD, but we haven't even started doing our taxes yet so I'm not sure. If we get one, it's going to her college fund. I know it's better not to give the government a free loan, but I find owing stressful so my ideal would be to plan our taxes out so we have a small (less than $100) refund. DH does a lot of freelance work, though, so that will never happen.
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No, I hope to be as close to 0 as possible, but we usually end up owing a few hundred. One year I had to pay over 3k!
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We don't count on our tax return, but we usually get one and it's saved or used for "fun" stuff.
Personally, I don't mind letting the government have a little interest free loan. I know myself well enough to know that I wouldn't be investing that $3000 or whatever I get in any kind of high yield investment. Honestly, higher income means I probably spend more on stuff like LO's clothes or Starbucks.
We already have a set amount we invest and we have an investment property, and a savings plan so those bases are covered.
I just know myself well enough to know that although it sounds good to say, "I plan to make money with my money rather than pay Uncle Sam", I probably won't on that extra 2-300 a month.
I must be alone in that though! What can I say...very little will power over here. I mean, once I'm met my savings goal for a month, it's spend city over here. heh.
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I over withhold on purpose, as enforced savings. I have plenty of other savings and some investments, and for me, the refund feels better than the few dollars of theoretical interest I'd make.
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@Anagram: you said it much more eloquently than I did!
Seriously, if there's a guaranteed high-yield interest investment for a few hundred bucks over less than a year, I'd like to know about it!
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Does anyone else *not mind* the fact the government is making money off their withholding? I'm fine with supporting our country!
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@Anagram: Thank you! I agree! I hate how people (IRL and internet) make me so gulity for getting a big refund from the IRS. It's my finances. Do what you want with your money and let me decide what I do with mine. No need to be judgey. I have investment accounts, savings accounts and other things, too. I'm not overspending. Yeah, I have debt that I racked up when I was young but I'm hoping to have that paid off in the next year or so.
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@jedeve: I don't mind. They aren't really making money though. They are just banking it for us.
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For me, it's not about the interest I would earn, it is more the fact that once the money is out the door, they can take their time getting it back to you, or even worse, not give it to you at all because of computer glitches or whatever.
I guess it is more about control over my own money, if that makes sense.
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I always get a bit of a tax return, but I never rely on it or expect it. Its never good to assume the government - state or federal - is going to give you money. I often get an IOU from the state on my tax return. The best scenario is for you to take full control of your money and not owe anything and not get anything back at tax time. Your tax return money is just money that you loaned interest-free to the government.
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It just goes into our savings, so even though we get one, we don't blow it. We just keep on living life as always.
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@bluestriped bee: true, but as an interest-free loan, they are benefiting. Though I'm fine with that. It allows for a more steady cash flow and budgeting for governments.
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@jedeve: Sorry, but in Switzerland, for example, you don't get source taxed (if you are a swiss citizen, at least). I don't think anyone would say that they're not supporting their government.
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Once we both started working full time, we've always had to pay.
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@jedeve: True. Yeah, I don't have a problem with it either.
Yeah. I've never gotten a 'Oops, we spent your refund. No refund for you.' Haha.
I do my taxes and it says my refund is $XXXX and it gets deposited. If it's late, I'll call to check the deposit.
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@littlek: interesting. I'll check it out. Our CPA always tell us it makes more sense to file jointly and he switches who he counts as "head of household" depending on the year.
I have NEVER had an issue getting my refund. It's usually deposited in my bank account within weeks.
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We almost always get a refund, so I have high hopes for one this year as well. We in no way count on the money though. If we get a refund this year, it will help to pay for the new windows we're getting in a few weeks!
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@bluestriped bee: Who's judging someone else?
I don't care what you do with your tax filing, I just care what I do with mine. I think everyone else is mostly on the same page, no?
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@locavore_mama: Same. I've been filing taxes for well over a decade and I've never had a computer glitch or issue with getting my refund.
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@Anagram: My dad actually did that (adding more taxes) because it's what worked for him (forced savings). While i may not agree with that philosophy i think it's good to do what works for you. And hey, if that money is going to go towards your savings instead of $4 lattes, more power to you!
@jedeve: I don't think by paying just enough taxes so you don't' get a return necessarily means you aren't supporting the government. By getting a tax return, it just means that you're paying more than you should.
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@locavore_mama: yeah, me neither, but I don't really want to ever find out.
Nor do I want to be sent an IOU!
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@looch: @MrsMcD: Maybe it's because i'm in Canada but what the heck is a tax IOU? Does it mean the government can't give you a refund??
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Nope, we always owe.
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@Freckles: State governements sometimes can't balance their budgets and literally run out of money. It's more from a state filing than a federal that it makes me nervous (hello California!).
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@looch: No one in particular here but some of my IRL friends have mentioned how I shouldn't be giving the government an interest free loan. My silent thought to them is 'And what if I do?'
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We used to owe back when we got bonuses, but now we always get a hefty refund back, which we choose to do. We rely on it for our "big yearly bills" like property taxes, home insurance, and my husband's hunting lease.
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We only use it for an extra payment for our student loans. We usually only get about $500 back, so it's not too much.
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@locavore_mama: We have an amazing tax preparer and he's taught us a lot about how to play the game better. We write off more than we realized we could. Pull more money into a retirement account, yet still bring home the same amount of money. All kinds of different stuff. We get WAY more back to make up for his small fee as a result. Maybe there's someone you can consult in your area?
@Anagram: @MoonMoon: Exactly. We would prefer to make than owe, it just makes us feel more comfortable.
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@bluestriped bee: My thinking is that realistically if I held onto my own money I would make maybe an extra $20? I think the big check once a year feels more rewarding.
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@Boogs: Yup!
That and if I had it in savings, I would have easy access to it.
With the money I am 'loaning' the government, I don't have easy access. If I wanted that money, I would have to change my withholding at work. (Faxing forms and all.) It's better that it's out of sight and out of mind and then tax season comes and 'Oh, yeah. We get a refund soon.'
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I am totally fine with overwitholding as I also think that the forced savings can be very powerful. My DH is a spendaholic, and I like the fact that when the lump sum arrives we can just max out Roth IRAs in one go and call it a day hahaha. There is no way that we would force ourselves to save at the same pace otherwise.
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@Boogs: @bluestriped bee: I feel the same way. I never tell anyone that though!
I never count on getting a refund but we usually do, at least from federal. We always owe the state because DH works on commission. Luckily we have gotten it down so that we usually only owe a couple hundred dollars.
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@Anagram: same here! While I don't rely on a refund, I am aware that my withholding is set up to take too little out. I would not spend the extra money a month as wisely as I 'spend' my refund, so I'm totally ok with giving the government my money for a while.
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We hope that we get some back, and usually pick something that we would spend it on (replacing a window, buying a couch, etc). But if it doesn't happen, its not a problem, because its 'extra' money anyway.
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@Freckles: Maybe its just a California thing, but basically when California owes you money but it doesn't have the ability to pay you the money, the state sends you an "IOU." Literally, it mean California owes me money. It takes months or more to get. You can't just call California up on the phone and ask her for it.
@Boogs: a great tax guy is worth his weight in gold!
@Anagram: its so true that the tax refund is great if a person otherwise wouldn't have done anything wise with the money had they held on to it themselves throughout the year.
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@locavore_mama: that doesn't make sense you can't be both MFJ and HoH.
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@MrsMcD: the IOU has become more common lately due to state budget issues.
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@littlek: what's MFJ?
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@plantains: My tax guy frequently talks about Roth IRAs, but that's one thing we've been bad about looking into. Anything you can tell me about them?
@KT326: Haha, we doesn't either because we have some family members that owe so much every year.
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