Income Tax Deadline Ahead

[Texsox]

 

Remember there are cheaper places to live than the United States.

[Queen Prawn]

We filed a month ago and are awaiting our check.

[kapkomet]

I actually got money back this year (albiet very small) for the first time in 5 years. Gotta love mortgages.

[Texsox]

I actually got money back this year (albiet very small) for the first time in 5 years.  Gotta love mortgages.

 

Send 'em more during the year and getting a bigger check, and a warning I am amazed by people (not you) who look at this like a savings account. They knowingly overpay during the year, giving a zero interest loan, and enjoying a big refund, that they reduce by paying for electronic filing and a cash advance. Why not pay the correct amount, put the oberpayment in a savings account, and earn interest?

[rangercal]

question... If you don't owe anything, do you have to file?

[Texsox]

question...  If you don't owe anything, do you have to file?

 

Do you mean you had no income? Then no. And there are certain minimums on income. But the bottom line is that most of the time, if your receive a W-2 that you paid income tax during the year, you need to file a return*.

 

 

 

*Not a substitute for actual expert advice. YMMV.

[Iwritecode]

question...  If you don't owe anything, do you have to file?

 

The only reason I know of that you wouldn't have to file is if you didn't work and/or receive a paycheck for the entire year of 2005. Otherwise you do.

[Iwritecode]

Send 'em more during the year and getting a bigger check, and a warning  I am amazed by people (not you) who look at this like a savings account. They knowingly overpay during the year, giving a zero interest loan, and enjoying a big refund, that they reduce by paying for electronic filing and a cash advance. Why not pay the correct amount, put the oberpayment in a savings account, and earn interest?

 

That would be because my wife is really bad at saving money. Right now she is giving money to her mom out of every paycheck to hold on to so we have money for birthdays, Christmas, etc... If she had access to the money, even in a savings account, she'd be tempted to spend it.

 

I know we are giving the government an interest-free loan but at least we know we can basically count on it being there every year...

[Iwritecode]

Does anyone know how much we're actually supposed to pay in taxes? I just looked and I pay less than 3% of my annual salary to federal and still get a refund.

 

I'm claiming 3 for a family of 5. My wife claims zero but makes less than half as much as I do.

[Steff]

Does anyone know how much we're actually supposed to pay in taxes? I just looked and I pay less than 3% of my annual salary to federal and still get a refund.

 

I'm claiming 3 for a family of 5. My wife claims zero but makes less than half as much as I do.

 

 

It depends on your income. The more you make, the more you pay.

 

Take your combined income, minus your deductions which = your AGI. Find that amount in the book and that's what you pay.

[THEWOOD]

I really really really dont want to send my check in to them.

[bmags]

whens the deadline AHHHHH

[Steff]

whens the deadline AHHHHH

 

 

Monday

[RockRaines]

I paid the government a hansome sum this year. Love being in the next tax bracket....

[kapkomet]

Send 'em more during the year and getting a bigger check, and a warning  I am amazed by people (not you) who look at this like a savings account. They knowingly overpay during the year, giving a zero interest loan, and enjoying a big refund, that they reduce by paying for electronic filing and a cash advance. Why not pay the correct amount, put the oberpayment in a savings account, and earn interest?

Yea, I agree with this. I plan on writing a check every year for between $1 and $500. That way I have my own money and pay them what I owe on my terms. The only thing that got me any refund at all is the Hope (Lifetime Learning) Credit.

[bmags]

AWESOME-O

[Iwritecode]

I just finished my state taxes through their website. I'm so excited I just can't figure out how I'm going to spend my entire $56.

 

Also I just looked at my federal return and I'm literally paying 0 taxes. Every single penny I paid in I'm getting back.

 

I need a better job...

[Texsox]

I really really really dont want to send my check in to them.

It's voluntary. If you don't, they have a great system where they will just come and get it. If you mess with them enough, they will give up, stop requiring you to pay taxes at all, and will even provide free room and board for 1-5 years, depending on how much you evade.

[Rex Hudler]

Send 'em more during the year and getting a bigger check, and a warning  I am amazed by people (not you) who look at this like a savings account. They knowingly overpay during the year, giving a zero interest loan, and enjoying a big refund, that they reduce by paying for electronic filing and a cash advance. Why not pay the correct amount, put the oberpayment in a savings account, and earn interest?

 

I gotta disagree with you on this one Texsox. While your thinking is correct financially, it doesn't fly in most cases when applying it to the real world for three reasons.

 

1. It is much, much less likely that someone will save that extra few bucks a paycheck they will get back by adjusting their withholding to accomodate the above approach. A few extra bucks each week (or however one gets paid) is likely to be spent on "stuff", often times stuff that isn't even a necessity.

 

2. How does one know exactly how much to adjust their withholding in an attempt to reach a zero overpayment/zero underpayment scenario? Things change for many people within a year. I believe that most people would prefer NOT to have to write a check of any size come each May.

 

3. The difference between a zero interest loan and the interest earned on a basic savings account is next to nothing for most people. Very few people make the kind of money that it would make a difference, and those that do aren't worried about a refund in the context most of us would.

 

The amount of interest earned in current market conditions nowhere near offsets the benefit of gaining a fairly sizable sum after taxes are filed. I'll take my refund every year and utilize that money in a positive way, rather than blowing a few extra bucks a week.

Edited April 16, 2006 by Rex Hudler

[Texsox]

I gotta disagree with you on this one Texsox.  While your thinking is correct financially, it doesn't fly in most cases when applying it to the real world for three reasons.

 

1.  It is much, much less likely that someone will save that extra few bucks a paycheck they will get back by adjusting their withholding to accomodate the above approach.  A few extra bucks each week (or however one gets paid) is likely to be spent on "stuff", often times stuff that isn't even a necessity. 

 

2.  How does one know exactly how much to adjust their withholding in an attempt to reach a zero overpayment/zero underpayment scenario?  Things change for many people within a year.  I believe that most people would prefer NOT to have to write a check of any size come each May.

 

3.  The difference between a zero interest loan and the interest earned on a basic savings account is next to nothing for most people.  Very few people make the kind of money that it would make a difference, and those that do aren't worried about a refund in the context most of us would.

 

The amount of interest earned in current market conditions nowhere near offsets the benefit of gaining a fairly sizable sum after taxes are filed.  I'll take my refund every year and utilize that money in a positive way, rather than blowing a few extra bucks a week.

 

 

I agree it doesn't work for some people. If we are talking a few dollars a paycheck, then we are only talking about a couple hundred dollar return. You are correct, that's pretty close already and about as close as you can get.

 

I'm talking about the $1200 + refunds. Those individuals should consider an autodraft into their mutual funds of that $100 to $200 a month. As far as the situations change during the year, I can think of some things that would decrease their tax liability, like the birth of a child, buying a home, unemployment, etc. But that is something to be concerned about. Many people could review their last couple years tand have a pretty good estimate of what they should pay. If you been claiming 2 dependents and getting a $1500 refund the past two years, see what claiming 3 would do for your net pay.

 

Then from what I've seen with the Fast Pay, advances and etc. It's worse than just taking an advance on a credit card. After overpaying all year, now they want the money fast, and pay extra for electronic filing and a cash advance.

 

Of all the regrets I have in life, not understanding it's better to be earning interest than paying interest until I was in my thirties, is one of the biggest. Maximizing your earnings, even starting with small amounts, is a discipline I wish I learned much earlier.

 

Finally, yes you may only be earning 2 or 3%, but if you are also paying 5 or 6% to get a rapid refund, then the gain is much bigger, between 7 and 10%.

[Chisoxfn]

question...  If you don't owe anything, do you have to file?

Even if you don't owe anything (assuming you worked) you still have to file. If you have no income thats another story.

[SnB]

i'm getting a 7 dollar check.

 

woot

[Rex Hudler]

I agree it doesn't work for some people. If we are talking a few dollars a paycheck, then we are only talking about a couple hundred dollar return. You are correct, that's pretty close already and about as close as you can get.

 

I'm talking about the $1200 + refunds. Those individuals should consider an autodraft into their mutual funds of that $100 to $200 a month. As far as the situations change during the year, I can think of some things that would decrease their tax liability, like the birth of a child, buying a home, unemployment, etc. But that is something to be concerned about. Many people could review their last couple years tand have a pretty good estimate of what they should pay. If you been claiming 2 dependents and getting a $1500 refund the past two years, see what claiming 3 would do for your net pay.

 

Then from what I've seen with the Fast Pay, advances and etc. It's worse than just taking an advance on a credit card. After overpaying all year, now they want the money fast, and pay extra for electronic filing and a cash advance.

 

Of all the regrets I have in life, not understanding it's better to be earning interest than paying interest until I was in my thirties, is one of the biggest. Maximizing your earnings, even starting with small amounts, is a discipline I wish I learned much earlier.

 

Finally, yes you may only be earning 2 or 3%, but if you are also paying 5 or 6% to get a rapid refund, then the gain is much bigger, between 7 and 10%.

 

But not everyone does the FastPay, advances, etc. That is definitely a bad decision financially. I do chose to file electronically and use direct deposit, but that only cost me roughly 1.5%. On a $1200 refund as you pointed out, the difference between not getting interest and in filing electronically is likely $50 or less. I have no problem giving up $50 for a lump sum that I can use for something specific, be it vacation, home improvement or whatever.

 

If everyone was perfectly disciplined with their money.... That will never happen so there is no reason to go any farther.

[Texsox]

But not everyone does the FastPay, advances, etc.  That is definitely a bad decision financially.  I do chose to file electronically and use direct deposit, but that only cost me roughly 1.5%.  On a $1200 refund as you pointed out, the difference between not getting interest and in filing electronically is likely $50 or less.  I have no problem giving up $50 for a lump sum that I can use for something specific, be it vacation, home improvement or whatever. 

 

If everyone was perfectly disciplined with their money....    That will never happen so there is no reason to go any farther.

 

Of course, this is much better than just blowing the $1,200 in lattes and misc. throughout the year. But I think we both agree paying the government to save money for you is not as good as being paid to save the money. Having $1300 instead of $1200 for the same vacation, home improvement, etc. would be better. Of course when I was 27, I wouldn't of had the $1200 and would have just charged it. So like I said, I wish I woulda, coulda, shoulda done it when I was younger, but I didn't. Earning interest on your interest is a powerful tool in increasing your financial well being.

[Rex Hudler]

Earning interest on your interest is a powerful tool in increasing your financial well being.

 

With that, we certainly agree.