View Full Version : if you get a refund, taxes
So what are your plans?
I have a couple ones coming since I am catching up back tax years (the foreclosure year has been a pain to understand but Ithink I got it now). The state never takes enough out so I pay a little in state taxes. So my plans are (guessing $1500)
* pay the state taxes $300?).
* put the balance in the savings associated with checking
* pay every bill on time and in full regardless of child support coming on a certain date, use child support to keep savings at constant level
My goal is in 6 months to improve my credit report dramatically, reduce my stress by not being dependant on my ex who is contract work right now, and then have a reward AFTER I see the plan work. Hmm, now that is the fun part to think about.
How about others?
flowerseverywhere
2-17-12, 6:12am
putting into the buying a used RV fund. We are going to try out the RV lifestyle as we tent camp and are getting old for it. I have a dream to sell everything and live like a nomad while we are still young enough to do it.
We are getting an insane refund this year. We are putting half in the EF and spending the other half mostly on home improvements and educational stuff.
We're going to put hardwood or good laminate floors in the living room. 5 kids + cat + carpet is not the best combination.
We are also going to finally get rid of the horrific pink panelling in the family room and build a coat closet down there. It's right off of the garage. FIL and DH are going to do the work themselves.
I'm getting a new patio table too, and some planters. The deck could use some love and the girls really want to do some container gardening this year.
We will also be getting new beds for the kids and a new mattress for us. The girls are getting loft beds since they will now be sharing their room with a new sister. James is done with the crib and has been sleeping on a mattress on the floor. It's time for a real bed now that he's past the stage where he would roll off of it.
We get about $2500/year back. We had one year a few years ago where I was on a taxable scholarship for about 6 months, and didn't realize until I went to do my taxes that I would owe tax on the stipend and tuition reimbursement -- had gotten used to being able to exclude "foreign earned income" but a scholarship isn't considered earned income. So we had to pay taxes that year, but thankfully no penalties because I caught it before January 15th and made the payment, and we hadn't had any tax owed the previous year. But since then I have asked DH to have $100/check withheld from his paycheck, just to make sure we don't ever have that situation again. And now i also know that if we have any unearned income coming in during the year that is likely to reach taxable levels, we have to file quarterly payments.
Anyway, we don't really do anything special with the money we get back. The amount I earn working in the US for business trips every year is now fairly close to that, so I just kind of move some money out of savings into my Roth (which I actually did yesterday), and then when the refund comes it goes back into savings. DH made two trips to the US this year so his Roth contribution is going to be higher -- need to move that over from savings to Roth once our next paychecks come in (hadn't anticipated it being so high, so had already transferred some into our ING accounts, which function as our emergency fund).
lhamo
Okay can we just add a chunk of money to what I expected, I am feeling sooo good. It has been a long time without relief. I think I may take a part of it and spend it either on the house or give each kid some new clothes money.
Wildflower
2-17-12, 11:22pm
We will also be getting new beds for the kids and a new mattress for us. The girls are getting loft beds since they will now be sharing their room with a new sister. James is done with the crib and has been sleeping on a mattress on the floor. It's time for a real bed now that he's past the stage where he would roll off of it.
A new sister! How wonderful! Congrats, Stella and family! :)
We are putting most all of our refund in savings, and probably DH and I will both buy a pair of badly needed new shoes. May buy a year long membership pass to our local botanical gardens. Visiting that place whenever we want during the 4 different seasons here - all that beauty and nature would be good for the soul I think....
I'm blown away by my taxes. This is my second year without a child. Just a spouse. I changed my exemptions; had extra taken out and still owe 700 dollars. I dont' know what it is....I only make 15 dollars an hour. I don't own my home. But I just can't understand how I went from refund to owing so much!
Straight to my emergency fund, which was too low for my peace of mind.
We got ours back yesterday and we then paid off two of our debts.
Ours will go back into our business.
And, we shouldn't get one from the US. Nor should we be paying any. But we have to file anyway.
We had a crazy year last year. We have to pay $168 to state but get a nice big federal refund. We will get some work done on DH's motorcycle. The rest will probably go to pay for college for 2 boys.
loosechickens
2-23-12, 9:08pm
It's nice hearing all the stuff that folks will do with their refunds, but as simple livers, we should remember what bae has said over and over and over. If you GET a big refund, it only means that you gave the government an interest free loan of YOUR money, so should be seen as something to be corrected, rather than a windfall. Far better to adjust withholding or estimated tax payments so that you scoot under the wire having paid just what you owe, and put the extra money in savings yourself through the year, so you can earn the interest instead of the government.
I know that right now, interest rates are the pits, so maybe it's not as important as it's been in other times, but that won't always be the case, so getting out of the mindset of seeing a big refund as a "windfall" and into the mindset of "gosh, why did I give the government that interest free loan?" is a good thing to do.
Not to rain on anybody's parade, but it all counts. I'm surprised bae hasn't been in here on this thread saying the same thing, as he's done in other years......don't always find a lot that bae and I agree on, especially politically, but on this, am definitely on the "bae page".......... JMHO
I probably won't get much of a refund this year. Actually went back and made some adjustments so we could have more through out the year. If I get anything it'll go into savings. I do have a list of things I'd like repaired and a list of things we need to find some money for (eye exams, dental, etc). And I really want to replace my SUV with a small truck.
Maybe we'll get enough to take the family out for a nice dinner.
jennipurrr
2-24-12, 11:10am
I agree with Loosechickens about the large refund thing, especially if you're getting it year after year. One of DH's relatives was bragging about his $6000 refund, but is in overdraft in his checking account all the time. $500/mo could go a long way to preventing those fees. However, because his savings habits are so poor, this is really the only time he ever sees that kind of chunk of money, and I can imagine for some people that could be a positive thing - he usually blows through his fairly mindlessly though, so I wouldn't call it a positive.
I received my fed refund yesterday actually. It is not a big one, and it will just go into the checking account. It will likely help us meet our mortgage extra payment goals for next month since DH and I are going on a trip in addition to regular spending.
Blackdog Lin
2-25-12, 9:27pm
Taxes not done yet, though have appointment for week after next; and whatever the refund is, whether larger or smaller, is going back into the EF to pay back my beautiful new bathroom remodel expenses. We borrowed from ourselves to pay for it; hoping the tax refund will reimburse at least a large part of it.
We have a healthy (not huge, but for our socio-econometric place in the world, healthy) EF, and we use it as our own "bank". Borrow from it to do necessaries, then I am fanatical about "girdling our loins" and making do till we pay it back.
In an ideal world our refund this year would pay back 70% of the bathroom repairs, and we could allocate $300. or $400.00 toward something "fun". And then I'll pay the rest of the EF back.
I'm hopeful.....
Got a big refund this year. After a lot of careful thought have decided to help someone who needs help. I almost never advocate doing this because it so often can end up supporting dysfunctionality, but this is an exceptional situation.
We're getting zip, zilch, nada in terms of a refund. DH and I were both unemployed all last year, but only he was paid unemployment. We still have to keep filing U.S. tax returns even though we're now living overseas, but we're HIGHLY unlikely to exceed the foreign-earned income exclusion threshold this year, so we won't have to pay anything, either. However, there is the downside that I can't contribute to my Roth-IRA anymore...at least, the stock brokerage who has my account now won't accept anymore contributions from me, since they're not licensed to do business outside the U.S.
I put it all towards the balance on our Home Equity Loan. Its almost paid off!
Far better to adjust withholding or estimated tax payments so that you scoot under the wire having paid just what you owe, and put the extra money in savings yourself through the year, so you can earn the interest instead of the government.
And if you are really into optimization, you can try to arrange things to *owe* as much tax as possible on April 15th without going into penalties, thus forcing the government to loan *you* money :-)
I find the clause in the penalty calculation that says "Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller."
If you have good control of your income stream, you can ping-pong income amounts between years so as not to attract penalties in many years, even if you sit on "their" money until the bitter end.
http://www.irs.gov/taxtopics/tc306.html
Mighty Frugal
5-12-12, 7:40pm
We put dh's into savings and mine into our chequing to pay for the other half of our family vacation-in our province staying at a cottage as well as more of a float in our chequing. We both got back pretty much the same
After I downsize, I'll probably change my deduction status, but at this point I'm content to just roll my refund into the property taxes that are due shortly after tax day. What is interest these days, one percent? Not enough to worry about.
My refund becomes my Fun Fund for the year. This goes towards special treats for myself, such as concerts, movies, shows, day trips, etc. Last year I spent some of it on my two Reflexology classes. Anything not considered a necessity usually falls in the Fun Fund.
Blackdog Lin
5-13-12, 8:58pm
I love the idea of a fun fund!
But alas, we had home improvement that NEEDED done. Things had gotten ugly, and need improved and repaired to maintain the value of the homestead that I may want/need to sell in 10 years. The income-tax refund paid for 50% of the work we did on the house. I was delighted to have the bonus to pay for part of the needed work.....
Bastelmutti
5-14-12, 10:55am
We are using ours for tickets to visit family at Christmas. We are aiming for only a small refund to maximize the money we keep during the year, but my income is variable, so we have been vacillating between owing (too much for my comfort) and getting a fairly modest refund.
I'm blown away by my taxes. This is my second year without a child. Just a spouse. I changed my exemptions; had extra taken out and still owe 700 dollars. I dont' know what it is....I only make 15 dollars an hour. I don't own my home. But I just can't understand how I went from refund to owing so much!
My dad, an accountant who fully understands the tax laws and has always done his own taxes, had pretty much the same response the first full year after mom died. His taxes, as a retired person now single, changed dramatically.
putting into the buying a used RV fund. We are going to try out the RV lifestyle as we tent camp and are getting old for it. I have a dream to sell everything and live like a nomad while we are still young enough to do it.
:cool::cool::cool::cool: Welcome to the dream and the lifestyle!
It's nice hearing all the stuff that folks will do with their refunds, but as simple livers, we should remember what bae has said over and over and over. If you GET a big refund, it only means that you gave the government an interest free loan of YOUR money, so should be seen as something to be corrected, rather than a windfall. Far better to adjust withholding or estimated tax payments so that you scoot under the wire having paid just what you owe, and put the extra money in savings yourself through the year, so you can earn the interest instead of the government.
I know that right now, interest rates are the pits, so maybe it's not as important as it's been in other times, but that won't always be the case, so getting out of the mindset of seeing a big refund as a "windfall" and into the mindset of "gosh, why did I give the government that interest free loan?" is a good thing to do.
Not to rain on anybody's parade, but it all counts. I'm surprised bae hasn't been in here on this thread saying the same thing, as he's done in other years......don't always find a lot that bae and I agree on, especially politically, but on this, am definitely on the "bae page".......... JMHO
This year we owe, actually more than we thought we would. Unfortunately (or fortunately which ever way you want to look at it) I worked an extra month with a company that did NOT take out enough for taxes and we ended up owing more than $1K and therefore had to pay a penalty. DH also worked last year (as well as this year) and so when they did not take enough out, our taxes went up. We just take the standard deductions as we do not have any loans and we get ~ $15K in interest from CDs and bonds each year. So there is only two ways to reduce, either make less (NOT!) or make to much more that we would have deductions. NOT! Or just suck it up and deal. DONE!
And if you are really into optimization, you can try to arrange things to *owe* as much tax as possible on April 15th without going into penalties, thus forcing the government to loan *you* money :-)
I find the clause in the penalty calculation that says "Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller."
If you have good control of your income stream, you can ping-pong income amounts between years so as not to attract penalties in many years, even if you sit on "their" money until the bitter end.
http://www.irs.gov/taxtopics/tc306.html
I guess this is what we are doing. We will have to play to see how it works, but with DH making money last year (first since 2009 when he retired) we were not ready for it and did not pay enough attention. Thankfully the penalty was less than $50. I would rather owe than get back when he time is due. Thanks for the link.
I had a larger than expected refund earlier this year - between that and my year end bonus I got my savings up to about 3 months in wages and eliminated 2/3's of my credit card debt.
I've thought about tweaking my W4, but as it was said interest rates stink right now. Market doesn't look so good, either. Probably would be better getting the money now instead of later, but it's a very out of sight, out of mind way to save.
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