Tax returns. What are you spending it on? (1 Viewer)

[Jason GT]

Moe,

If you contribute regularly to an RSP there's a way to have the tax credit applied to each paycheque. You basically fill out some forms which declare how large an RSP contribution you make per period and that contribution is credited immediately rather than at the end of the year.

This may only apply to an employer-administered pension plan, but may be worth looking into.

Bammo, no more interest-free loan to the gov't.

 

[Citizen87645]

I'll be owing for the first time ever - forgot to recalculate my withholding last January. Not a big deal for the same reasons as Leila.

 

[Michael D. Bunting]

Vegas trip for me and the gf as well...possibly a suprise proposal and quickie Vegas wedding Good thing she doesn't read this forum here...

 

[Scott L]

I'm gonna say credit card but I know I'll buy something I don't need. You only live once right?

 

[Bryan Ri]

Mine is going right into my savings. I may only be 21, but I have the goal set of buying a house by the time I'm 24

 

[Eric Kahn]

paying off credit card debt

 

[Brian Harnish]

I'll probably put mine towards a down payment on a new 2005 Ford Mustang GT.

 

[Evan S]

I would love to put my return into my Roth IRA but between my work bonus and my tax return I think I am going to put a new roof on my house (with new gutters) and do a small kitchen remodel (new countertops and floor). Hopefully those two income streams will cover it.

 

[Ron-P]

Is there a formula for figuring out how much that intrest would be?

 

[Marc_Sulinski]

If you set up your witholdings correctly, you should not have to get such a big refund. Ideally, you want a refund of 0.

 

[Jeff Savage]

I was going to use it to buy a Z3 or AE700 but I found out that I need to move some stuff from my Dad's house in VT to my house in TX and my sister's place in CA so it will have to be used for that instead.

Laters,
Jeff

 

[Ron-P]

Yes, I am aware of that. After the previous years large refunds I changed my witholdings last year to hopefully reduce it but still getting a refund so I don't owe.

 

[Shane Roach]

We're still awaiting a few documents before we can run the numbers, but with some new deductions (mortgage interest, tuition on wife's M.Ed.) we ought to have a better refund than in the past. It'll go into savings for a while until I get a new job (I'm currently employed, but with an unstable company), then go for living room furniture and new windows.

Unless I can convince her that a WRX STi is more practical than chairs...

 

[RichP]

It's whatever you would have invested it in. If you invested in a Bond fund or some other stable fund using Dollar Cost Averaging over the year and it returned 7% year over, your $5000 would now be $5350. May not seem like much, but compound that year over year and you'll be astounded how much it amounts to.

For example, let's assume you invest that $5000 in a fund that returns 7% year over (certainly not difficult).

Now let's assume that you keep investing $5000 a year in that same fund for 15 years instead of giving it to the government.

In 15 years, you now have $142,128 on an investment of $75,000 (15 yrs * $5000).

So giving the money to the government costs you $67,000 over 15 years and costs you $130,000 over 20 years.

I had 2 Small Cap funds that returned well over 16% last year, using DCA, that would have made that $5000 into ~$5700 or so in one year and if we assume a return of 11% (the standard historical market rate) over 15 years, that amounts to: $205,931.

Giving the Govt a $5000 interest free loan for a year is not really what you want to do. I would see a tax advisor and determine why your withholding is so high. Change it so that you break even at the end of the year, or even better you owe a small amount like $100. That way you know you've absolutely maximized your Net income.

You contribute to a 401(k) or equivalent right?

 

[Ron-P]

Well, just ran my taxes, $4,400 is coming back at me. Looks like I need to relook at my withholdings. Last year was about $5,600 so it went down, just not enough.

 

[Joe Szott]

Considering I'll likely owe the govt in the neighborhood of $6-8K this year, not very darn much

 

[Mark Sherman]

Im meeting with the realator on Monday. My refund will be paying for redoing my old house( new Kitchen, bath, carpets)so I can sell it much much easier Iv heard that people look at kitchens and baths whn buying a house.


Anyone want to buy a 1000 square foot condo?

 

[Chris]

Same here. This year, I figure to owe in about $14k, but we've been saving through the year for that, always set aside, so *shrug* you just cut them a check at the end and move on

 

[Michael Harris]

After almost 26 years of refunds, I am paying. Boy, am I paying. I changed jobs in mid-year and I guess my withholding got jacked. Changed my W-4 almost immediately in order to avoid this next year. Really sucks having to write a check. I used to almost always file in January or early February. Not this year.

 

[LewB]

I've got good news, and I've got bad news ...

Good news - I'm getting a refund (debatable, but work with me)
Bad News - I just got my property tax bill

My federal refund will be going directly to pay a portion of the property tax bill.