TaxRefundSeason: So how much do you expect to get?

Repeat after me: I owe nothing and I pay nothing...

It's your money you're getting back...Earn interest yourself...Just try and adjust/manage your W-4 (withholding) so you get $0 back and owe close to $0...sad to say, but I think may get some $$ back...maybe a $1000...

And just for good measure, make sure you max your 401K by the end of year (12/31/XX)...That way you can max out your company match if you have one...If you max out too early, you get no company match...

 

Ok, does this make any sense or am I totally off? Assume I lose $100 a month by letting the IRS make interest off of me. If I let them “screw me”, then I will get a $1,200 refund (refunds aren’t taxed). If I get my money and don’t put it in a tax-free vehicle, then I have to pay tax on it. Assume my rate is 15%, so I only get $85 back. So over the course of the year I have collected $1,020. Even if I made 15% interest off of that entire amount (which I won’t since it’s coming monthly), then I get an extra $153…which brings me to $1,173 total…still less than my refund. And that’s assuming I save it all…right?

Now I understand the argument of having the option to use your money throughout the year, but I don’t think the interest you will make off of it is that significant.

 

There are 2 truths in this world.

Every living thing begins

and every living thing ends.


Procreation is the meaning of life.

 

I think your logic is incorrect. I think you only pay an extra 15% (if that is your tax rate) on the interest you earn. For example, if you saved that $100 per month and it earned 5% interest, at the end of the year you would have earned interest of about $30. You would then have to pay tax on that additional earnings of $4.50. You would be ahead by $25.50, which is not a lot, but every little bit helps.

When I was young and taxes were simple, I would try to owe the most possible, without paying a penalty. Now that has become too difficult and tricky with the AMT and my wife being self-employed, which allows us to have until April 15 to contribute to her individual 401k. I cannot even figure out how much to contribute to her 401k until after the year ends.

I expect we will get a refund of about $6,000, but first we must contribute about $13,000 to her 401k.

 

I owe about $400.

 

Yes, but when you receive that $100 per month it is taxed unless you have it in a tax-free vehicle. If you get it back in a refund you get the full $100. If it’s taxed (say at 15%) then you only get $85. So you need to make $15 in interest every month just to break even.

Now you do get the benefit of using that $85 immediately, as opposed to waiting till the next year to use the lump sum.

 

I just got back $1400 this morning. That was fast. I filed Sunday night

 

Does not work that way. Let's say you earn $1,000 for the year all taxed at 15% you would owe $150 in tax. However for example 1 you paid in $250, therefore you get a refund of $100 & for example 2 you paid just right amount of $150 and get no refund but get to invest the $100 you did not pay in example 1 and earn 10% on the money. Lets look at how you end up in each example:

Example 1:

Net Wages $750 ($1,000 -$250 in withholding)
Tax Refund 100

Total $ 850
Total Tax 150

Example 2:

Net Wages $850 ($1,000 -$150 in withholding)
Tax Refund 0
Interest 10 (100 x 10%)

Total $ 858.50
Total Tax 151.50 (includes tax on interest 10 x 15%)

 

http://www.paycheckcity.com/NetPayCalc/netpaycalculator.asp

good calculator....gives you an idea of what changes in withholding will do for your net pay.

 

wow..

bookmarked it..

thank u.