The running line among personal finance experts is that those who get tax refunds are simpletons who can’t do basic math or spendthrifts who have no self-control. After all, a tax refund is essentially an interest-free loan to the government for a year. The popular thinking goes: if you readjust your tax forms and muster the discipline to put that money into savings account, you can reap the benefits of the interest!
Well, I don’t think I’m a simpleton or a spendthrift. I understand that refunds are not “free money”, and I don’t depend on the forced savings mechanism of the refund, but I still like tax refunds.
Yesterday I sat down and finished all my taxes in one go. I will be receiving $2,000+ in Federal and State refunds. Though I didn’t purposefully try to get a big refund (I withheld at my 2008 rate but had lower income in 2009 because of unemployment, also, I withheld for federal income taxes on unemployment payouts), I am happy about every penny of that money.
The forgone interest on my refund is minimal; 1% on $2,000 is $20 (which is taxable). Also, I’d rather err on the side of overpaying taxes than have to fork over money in April, or worse, have to suffer underpayment penalties.
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Cha Ching!
I also err on the side of conservatism.
You should tell us how you're going to spend your tax refund on responsibile things
Tango's responsible, right?
I think I'm going to save most of it, but there will be a few hundred bucks of play money for travel.
What are you going to do with it?
What are you going to do with it??
Spend it! Just kidding! I think most to savings and some to travel expenses. Oh, and of course it will also subsidize my tango habit.
Knowing you, I would guess that a big portion is going to a retirement account?
I'm totally with you! It's a great little bonus… in my industry I don't get bonuses, so I kinda like it too! I got a huge refund this year… mainly due to installing solar panels.
congrats on your bonus! save is wisely
Congrats on your refund! How are the solar panels working for you?
I'm with you on this one. I'm a total personal finance simpleton (and fine with that!), but I'd rather not owe money at the end of the day. I'm also not someone who counts on my refund to pay for things, I think of it as something I can either invest or use to put towards something I wouldn't have at that time (as in a car loan, yes, I know, they are evil and should be avoided).
I tend to get a refund because I claim zero on my W-2 so I don't have to owe money due to freelance writing work. But many people — like newer homeowners — get a refund due to the deductions they can claim on mortgage interest and property taxes. In those cases, unless you have your employer take out a lot more taxes out of your paycheck, a refund can't be helped. I also like getting refunds!
I was just thrilled to get a refund at ALL this year! I did not withhold anything from my unemployment checks (I couldn't afford to; I needed that whole check!), so I was expecting to owe big time. Luckily, I found out that the first $2,400 of unemployment pay is tax-free for federal, and the whole darn thing is tax-free for my CA state taxes. Thank you, California! So yeah. I am getting a few hundred dollars back…as soon as I get my paycheck and can afford the stupid $60 TurboTax fee.
I've thought about doing my own taxes, but TurboTax makes it so easy! $60 seems high to me, but maybe it's just better this way? Easy, and I know it's all right.
I did the Free Federal filing with TurboTax, and I paid $27.95 to file CA taxes… if your tax situation isn't too complicated I don't see why you can't file for free federal. $60 seems high.
I was really happy about the first $2,400 tax-free exemption, and I'm with you on thank you to California!
Yeah, I didn't qualify for Free Federal when I did my 2008 taxes (income was too high), but I should qualify this year. Not sure why I started on Deluxe…it's about $25. That plus the $27.95 for CA brought me up towards $60.
I wonder if I can go back and do a Free Federal, even though I've already started the process with a Deluxe…
Hmmm..I couldn't see this box from work. Maybe they are banning posting to blogs during the day. HA!!HA!!
It seems that everyone is getting a large refund this year. I guess I better hurry and file so I can get my large refund as well. I made a few changes this year, so it should work in my favor. Thanks for getting back to me so quickly.
I'm with you on this one! I love getting my tax return too. If I took the proper allowances, I would probably spend the money during the year! This way it's a forced saving account!
Thanks Uncle Sam (sort of :p )!
I like getting refunds, too, but it's not happening this year. I link to your post on mine about tallying the 2009 tax damage: http://lavidakatie.blogspot.com/2010/02/taxes-don…
Most people don't save the refund throughout the year, so the argument oftentimes is moot. So, if it's a forced savings or a way to fund your vacation plans – so be it. A couple grand isn't too much to worry about, but I know of people who get $7-$10k back and that seems a bit much to me. At that point, maybe one should think differently.