You must be logged in to post Login


Lost Your Password?

Search Forums:


 






Minimum search word length is 4 characters – Maximum search word length is 84 characters
Wildcard Usage:
*  matches any number of characters    %  matches exactly one character

I like big tax returns

UserPost

1:22 pm
April 12, 2013


Edward Antrobus

Fort Collins, CO

Member

posts 1008

There I said it. I know it's an unpopular viewpoint in the PF blogosphere, but I'd rather get a big refund than an unpleasant surprise at tax time. And the "no-interest loan to the government" argument? I find it to be be a red-herring. Is a no-interest loan to the government really any worse than a basically no-interest loan to the bank in the form of a .01% savings interest rate?

At the end of the day, I believe that reducing withholdings to get more money in your paycheck usually gets wasted instead of spent wisely. And even if you do spend it wisely, the return isn't as good as you think it is. To prove my point, I created a calculator to determine how much money you would save if you made weekly extra payments on a debt than if you waited for a tax return and made one big extra payment. The link to this calculator is in my post on Why I Don't Care About Minimizing My Tax Return.

 I'm looking for editors, beta-readers, and some demographic research for my upcoming novel, Once Upon a Saturn Moon. If you like reading soft sci-fi thrillers, maybe with a touch of romance thrown in, you can find more information at http://seampublishing.com/once…..aturn-moon

If You Can Read, You Can Cookhttp://www.ifyoucanread.com | Think you can't cook? If you can read this sentence, then you can.

SEAM Publishinghttp://www.seampublishing.com | eBook formatting and publishing service

3:42 pm
April 12, 2013


krantcents

Member

posts 909

Edward Antrobus said:

There I said it. I know it's an unpopular viewpoint in the PF blogosphere, but I'd rather get a big refund than an unpleasant surprise at tax time. And the "no-interest loan to the government" argument? I find it to be be a red-herring. Is a no-interest loan to the government really any worse than a basically no-interest loan to the bank in the form of a .01% savings interest rate?

At the end of the day, I believe that reducing withholdings to get more money in your paycheck usually gets wasted instead of spent wisely. And even if you do spend it wisely, the return isn't as good as you think it is. To prove my point, I created a calculator to determine how much money you would save if you made weekly extra payments on a debt than if you waited for a tax return and made one big extra payment. The link to this calculator is in my post on Why I Don't Care About Minimizing My Tax Return.

Another approach would be to increase your savings deduction to offset the increased cash.  Whenever I received an increase or promotion I usually increased my savings deduction to save about 50% of it.  Just another thought!

krantcents  – Making Sense of Money

Website:   http://www.krantcents.com

Fan Page:  http://www.facebook.com/krantcents

Follow me onTwitter:  @krantcents

RSS feed: krantcents

5:12 am
April 15, 2013


jaicatalano

New York

Member

posts 846

I hate big tax returns. I can make so much more than the government can with my money if I have my money in my hand. Although on the flip side it's super cool to see a large amount come at you at once.  

8:26 am
April 15, 2013


Edward Antrobus

Fort Collins, CO

Member

posts 1008

jaicatalano said:

I hate big tax returns. I can make so much more than the government can with my money if I have my money in my hand. Although on the flip side it's super cool to see a large amount come at you at once.  

I ran the numbers, and I can't see any way of making a substantial return with the extra weekly cash as opposed to an annual disbursement.

 I'm looking for editors, beta-readers, and some demographic research for my upcoming novel, Once Upon a Saturn Moon. If you like reading soft sci-fi thrillers, maybe with a touch of romance thrown in, you can find more information at http://seampublishing.com/once…..aturn-moon

If You Can Read, You Can Cookhttp://www.ifyoucanread.com | Think you can't cook? If you can read this sentence, then you can.

SEAM Publishinghttp://www.seampublishing.com | eBook formatting and publishing service

9:24 am
April 16, 2013


The Family CEO

Member

posts 391

Post edited 9:26 am – April 16, 2013 by The Family CEO


krantcents said:

Edward Antrobus said:

There I said it. I know it's an unpopular viewpoint in the PF blogosphere, but I'd rather get a big refund than an unpleasant surprise at tax time. And the "no-interest loan to the government" argument? I find it to be be a red-herring. Is a no-interest loan to the government really any worse than a basically no-interest loan to the bank in the form of a .01% savings interest rate?

At the end of the day, I believe that reducing withholdings to get more money in your paycheck usually gets wasted instead of spent wisely. And even if you do spend it wisely, the return isn't as good as you think it is. To prove my point, I created a calculator to determine how much money you would save if you made weekly extra payments on a debt than if you waited for a tax return and made one big extra payment. The link to this calculator is in my post on Why I Don't Care About Minimizing My Tax Return.

Another approach would be to increase your savings deduction to offset the increased cash.  Whenever I received an increase or promotion I usually increased my savings deduction to save about 50% of it.  Just another thought!

I agree with both of you.

My first choice would be to do what KrantCents suggested: direct the amount of your weekly savings into a savings or investing account. I know the saving interest rates we're getting right now aren't big, but they may be again someday. And to me, it's really more about the principle of the thing than the $$. 

But I acknowledge that, as Edward suggests, many won't save the increase per paycheck and it will get eaten up. In that case, better to get the big refund.

Julie

The Family CEOA blog about money and the business of life.

Creating This Life – Simple ideas for everyday living.

Subscribe by email and Follow me on Facebook

10:50 am
April 16, 2013


MoneyIsTheRoot

Member

posts 1456

Edward Antrobus said:

jaicatalano said:

I hate big tax returns. I can make so much more than the government can with my money if I have my money in my hand. Although on the flip side it's super cool to see a large amount come at you at once.  

I ran the numbers, and I can't see any way of making a substantial return with the extra weekly cash as opposed to an annual disbursement.

Edward, we put money into savings accounts so that we have some form of liquidity for emergencies.  Do you have any debt? mortgage, student loans, credit cards, car loan, etc.?  If so, the interest rate is higher than 0.01%, which means that additional money could go towards that.  If you are getting $1,000 refunds then I wouldnt waste your time, since the benefit is minimal…but if you are getting $5,000+ every year then it might be something worth looking into.  The amount that goes into my savings account is usually the same no matter what, it's what I invest that changes with financial windfalls and shortfalls.  I can certainly earn more than 0.01% with my brokerage account, simply by investing in dividend paying stocks…Id much rather carry $5,000 worth of ADP's stock over 12 months than to get a refund from the government at the end of the year.

Member Blog:

Money Is The Root

Check me out on Facebook

 

Challenger Blogs:

Smart Wealth

11:34 am
April 16, 2013


Edward Antrobus

Fort Collins, CO

Member

posts 1008

At $5000 and credit card interest rates, it does become worth it to pay weekly. But for lower interest debts, such as my student loans (which have the highest rate of my debts), even at a $5000 return it is hardly worth it. There is a calculator in my post that works out the amount of interest saved by making additional weekly payments over an additional lump sum payment.

I would think that brokerage fees would eat a lot into weekly stock buys. Even at the $5000 return level, weekly stock buys would eat up 10% ($96.15 weekly- $9.99 brokerage fee) of the investment. Judging by the performance of my portfolio, that would put me in negative returns!

 I'm looking for editors, beta-readers, and some demographic research for my upcoming novel, Once Upon a Saturn Moon. If you like reading soft sci-fi thrillers, maybe with a touch of romance thrown in, you can find more information at http://seampublishing.com/once…..aturn-moon

If You Can Read, You Can Cookhttp://www.ifyoucanread.com | Think you can't cook? If you can read this sentence, then you can.

SEAM Publishinghttp://www.seampublishing.com | eBook formatting and publishing service

4:19 am
April 17, 2013


MoneyBeagle

Member

posts 1466

I've always looked at it that if you have the money, you might be tempted to spend it.  If you spend even 1% you come out behind compared to if you just let the government keep the money.  This assumes that you're just stashing it in an interest bearing account. 

 

Yeah, I suppose if you can find a guaranteed investment to put it into and it gains 30%, then it's a no-brainer, but that's tougher than it sounds…maybe not recently with the big runup of the stock market, but in a broader historical period, there's a big level of risk involved.

Since we use our tax returns to fund savings that go toward long term goals, it really doesn't matter one way or another, so we have about half coming in throughout the year and the other half coming in as a tax refund.

Member Site: Money Beagle

Visit Money Beagle    -    Email    -    Twitter    -   Facebook    -  Google+

12:18 am
April 25, 2013


Tom

New Member

posts 1

Post edited 12:35 am – April 25, 2013 by Tom


Hi all this is my first post..fondly known as a web evangelist I am all into studying my competitors' accomplishments..I  base my assessment on my own little understanding of the web industry.. as I am new to this forum I would like to know more about it .. looking forward to some interesting discussions with you guys!


About the Yakezie.com Forum

Forum Timezone: America/Los_Angeles

Forum Stats:

Groups: 2
Forums: 9
Topics: 6383
Posts: 84794

Membership:

There are 13652 Members
There have been 20 Guests

There are 9 Admins
There are 8 Moderators

Top Posters:

My Personal Finance Journey – 3159
Khaleef @ KNS Financial – 3149
Budgeting in the Fun Stuff – 3048
Sustainable PF – 2759
Miss T @ Prairie Eco-Thrifter – 2213
Eric – PersonalProfitability.com – 2120

Administrators: The College Investor (1935 Posts), Financial Samurai (1803 Posts), LaTisha @YoungFinances (1715 Posts), Forest Parks (1337 Posts), 20s Finances (1147 Posts), Money Reasons (697 Posts), Chris Johnson (78 Posts), Sydney at Untemplater (0 Posts), Suba (0 Posts)

Moderators: Suba @ Wealth Informatics (1876 Posts), sooverthis (1041 Posts), PK @ DQYDJ (361 Posts), jmichelsen (208 Posts), Ramona (13 Posts), JeremyNJohnson (4 Posts), Moderator (0 Posts), rackgeek (0 Posts)