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Why do people get so excited about getting a tax refund?


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31 replies to this topic

#1 of 32 OFFLINE   Tim Markley

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Posted February 17 2003 - 04:12 AM

I've often wondered about this. Every year around tax time I hear friends, relatives, etc. bragging about how much money they're getting back from their taxes. Don't people realize that the only thing they've accomplished is giving the governement an interest free loan with their money? Sure it's nice to get a big chunk of money but wouldn't you rather have that money go straight to your pocket? I just don't get it. Posted Image

#2 of 32 OFFLINE   Joe Szott

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Posted February 17 2003 - 04:19 AM

I think for some folks this is the only way they can get a big chunk to go to their pocket Posted Image Forced savings, otherwise they would have spent it throughout the year already...

#3 of 32 OFFLINE   Glenn Overholt

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Posted February 17 2003 - 04:39 AM

Its just extra money to spend.

Most of us know that is is ours to begin with, but getting it in our checks is very difficult. You'd almost have to be an accountant and if you screw up, you'll be making quartly payments for the rest of your life.

Glenn

#4 of 32 OFFLINE   LewB

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Posted February 17 2003 - 04:40 AM

Ahh, how I miss the late 90's Posted Image
I owed the feds $ every year due to gains in my 'investments' so I altered my withholding so as not to owe. Now that we are in the 00's my 'investments' are not doing so well, so there are no gains to pay taxes on. As a matter of fact there are losses. Now it's a double whammy, not only am I losing $ but I am also giving the gov't a free loan. Now where's that W-4 PDF when I need it ?

#5 of 32 ONLINE   Scott Merryfield

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Posted February 17 2003 - 04:51 AM

Quote:
Why do people get so excited about getting a tax refund?

Because they like giving an interest-free loan to the U.S. government?

#6 of 32 OFFLINE   Andrew W

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Posted February 17 2003 - 05:41 AM

I never get a refund. I always end up owing them a bit, but not enough to require quarterly payments.
Andrew in Austin

#7 of 32 OFFLINE   Ron-P

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Posted February 17 2003 - 06:01 AM

Quote:
Why do people get so excited about getting a tax refund?
I've got 3,756 reasons why.


Peace Out~Posted Image
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#8 of 32 OFFLINE   Dave Poehlman

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Posted February 17 2003 - 06:24 AM

The bigger your tax refund, the more money you could've had gaining interest in your bank account all year.

But, If I had more money in my bank account, I'd spend it on DVD's anyway.. at least with a large refund, I can spend it on a larger piece of HT equipment. Posted Image

#9 of 32 OFFLINE   Chris Lockwood

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Posted February 17 2003 - 06:27 AM

> Now where's that W-4 PDF when I need it ?

If your employer doesn't have the form, you can download it from www.irs.gov .

#10 of 32 OFFLINE   Todd Hochard

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Posted February 17 2003 - 06:30 AM

Here's why I'm excited-

I planned my W-4 to essentially break even, according to TurboTax 2001, and my best estimates for 2002. Heck, I even added an exemption, as I knew it would be a crappy year for my investments (and I was right, unfortunately).

I'm still getting $1300 back, and I paid in exactly what I thought I should. Tax reform? No, we don't need any...Posted Image

Todd
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#11 of 32 OFFLINE   Tim Markley

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Posted February 17 2003 - 07:19 AM

Quote:
The bigger your tax refund, the more money you could've had gaining interest in your bank account all year.
My point exactly. Put the money directly into your own pocket. I don't consider overpaying on taxes to be a good savings plan. Posted Image

#12 of 32 OFFLINE   Christ Reynolds

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Posted February 17 2003 - 07:24 AM

Quote:
Every year around tax time I hear friends, relatives, etc. bragging about how much money they're getting back from their taxes. Don't people realize that the only thing they've accomplished is giving the governement an interest free loan with their money?
i think its understood by most that this is whats going on. but is there any way to change the interest free loan to the govt? if there was, you would hear a lot less people 'bragging', including myself. i'd keep the money in my pocket in the first place. but if you keep the mindset that you only earn what you get in your paycheck, then you end up getting extra, then doesnt it feel like a gift of sorts? i know its not, but it doesnt take a lot of thinking to realize this is why people get excited.

CJ
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#13 of 32 OFFLINE   Tommy Ceez

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Posted February 17 2003 - 07:50 AM

You could set youself up with 10 dependants on your initial employee tax claim and owe money every year. You would then be collecting interest on the money until you have to pay up to the govt. BTW NY state (and maybe the fed, anyone know?) allows you to pay your owed taxes in 24 instalments with a obsenely low interest rate.
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#14 of 32 OFFLINE   Ron-P

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Posted February 17 2003 - 08:21 AM

Quote:
The bigger your tax refund, the more money you could've had gaining interest in your bank account all year.

This is true, but your talking pennies. I've got my allotted amount of $ that goes into savings each week, this is a 'bonus' as I see it. After all, it's paying for a very nice, fully loaded Mammoth ski trip.

I'd much rather get a refund...than owe.


Peace out~Posted Image
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#15 of 32 OFFLINE   Seth_S

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Posted February 17 2003 - 08:25 AM

I think that people see it as some kind of extra income for the year because they don't view over paying your taxes as a financial loss.

#16 of 32 OFFLINE   gregstaten

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Posted February 17 2003 - 08:26 AM

I'm also one of those whose goal is to not get a refund. Last year I received a huge refund due to an increase in my mortgage deduction. So, I ran the numbers and increased my deductions to reduce the size of the withholding.

-greg

#17 of 32 OFFLINE   Zen Butler

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Posted February 17 2003 - 08:32 AM

Quote:
I've got 3,756 reasons why.


They give refunds?

I know of 660 reasons why I don't know what the hell you are `talking about. Posted Image

bladerunner-thumb-510x227-39115_zpse210a


#18 of 32 OFFLINE   Paul O

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Posted February 17 2003 - 08:40 AM

Most americans live paycheck to paycheck and have no concept of financial planning. An Income Tax Refund is an enforced savings plan.

#19 of 32 OFFLINE   BrianW

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Posted February 17 2003 - 08:51 AM

Here’s just one scenario:

You collect unemployment, which has no income tax taken out of it, for four months of the year. When you do get a job, you fill out your W-4 conservatively, hoping to make up for the “Tax-Free” money you received from the state. In September, your spouse gets a job, but insists on filling out the W-4 according to the instructions, which, as we all know, never work for married couples, because the W-4 fails to take the “marriage penalty” into consideration in its worksheet instructions. So you adjust your W-4 to have more taxes take out to make up for it, but not too much, since it’s already September, and your spouse’s income for the year may will not be that great. In December, you suddenly remember that you made a withdrawal from your tax-deferred retirement fund to pay the mortgage while you were unemployed and will be required to pay not only tax on that money, but a ten-percent penalty as well. So you make another change to your W-4 for your final two paychecks of the year, sacrificing all your holiday spending, but confident that you’ve accurately estimated your tax obligations for this unusually complicated tax year.

In February of the next year, you collect all your W-2 forms, your 1099 forms from the unemployment office and your retirement fund account, and figure your taxes for the year. Although you did your absolute best, despite your significant financial struggles, to pay no more or no less than what you figured you owed Uncle Sam for the previous year, you discover that:

A) You grossly underfunded your income tax contributions, and you owe the government a significant amount of money.

B) You figured just about right, and the amount you owe, or the amount you’re getting back, is insignificant.

C) You grossly overfunded your income tax contributions, and the government owes you a significant amount of money.


I know which one I’d get excited about. If it’s not clear to you, I don’t know what to say. Interest-free loan or not, getting back money you never expected to see is hard to view as a bad thing, even if it means you failed in doing your absolute best not to lend your money to the government.

But if you’re the type who gets more excited over result B) than C), then good for you. I’m glad your financial situation is simple enough to allow you to accomplish this. But I hope you don’t let it make you think you’re superior or smarter than the rest of us who rejoice when a little unexpected cash comes our way, despite our best efforts to keep the extra interest we could have earned.

Well, maybe it makes you a little smarter than the rest of us. Posted Image
-Brian
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#20 of 32 OFFLINE   Craig Robertson

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Posted February 17 2003 - 08:53 AM

Quote:
You could set youself up with 10 dependants on your initial employee tax claim and owe money every year

i had 10 for the 2001 tax year and still got back $5k with state and federal combined. i lowered it to 7 for 2002, 'cause i can't claim my 19 year old son anymore, just his three brothers.


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