I’m Getting A Decent Tax Refund
March 30, 2009 – 6:23 amI’m getting a decent-sized tax refund this year, which is both good and bad news. Although I like this unexpected surprise of extra cash, I also know that I basically loaned the government money for free for a year. Not that you get much return on in savings accounts these days anyway, but I digress…. 
My dilemma is that the amount of taxes I owed over the past few years have varied to a large degree. A few years ago a didn’t have a house, and now I do. Some years I had some pretty big investment gains, and some years I had losses or didn’t make any trades at all. My wife an I also made some other major changes as well. We switched her retirement funds (new deposits) to go into a Roth 401k instead of a regular 401k. This increased our taxable income (obviously).
So my plan to address things this year is two fold. First, I changed my w-4 to include 2 exemptions. Last year I claimed zero and had them withhold a little extra money from every check.
Secondly, and more importantly, I’m going to review my total tax withholdings mid-year and comparte it to what TurboTax says I will owe at the end of the year. This way I’ll be able to track my withholdings and see if I’m headed for paying only what I owe. I’ll need to make adjustments for any taxable distributions and capital gains/losses I expect to have this year, but even without being sure about those items I’ll know if the tax withholdings on my primary income are enough. With 2 kids on the way this year I’m not exactly sure what impact will have on my taxes, but I can plug that into TurboTax as well and get an estimate.
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2 Responses to “I’m Getting A Decent Tax Refund”
Way to go. I had to pay few dollars this year but it wasn’t that bad. With this economy, every penny counts.
By Solo on Apr 2, 2009
Let’s be sure to not give a cent to the gov’t! I’m sure the average joe who whitholds an extra $25/PP is happy he kept his money the past year. He saved his $25 a pay period and will get back his $650 for the year plus interest! That should total $653 with an APY of 1%. WOOHOO!! We stuck it to the gov’t! We kept our three dollars!!! Let’s go celebrate! We can go to White Castle and if we’re lucky, we can each get a slider with bacon and cheese with the interest!!! Provided we saved the $25 each P.P.
If the gov’t kept those $3 for a million people each year, they’d have $3 Million! WOW! $3M in taxes that I don’t have to try and make up.
But wait, the average joe doesn’t save his $25/P.P. He spends it. So in May when his truck breaks down and he needs to pay the mechanic $600 he charges it. And pays 18% interest. If he is a good credit risk, it may be 8% interest. Good thing we screwed the gov’t over! Now I owe more than 8 x’s to the bank. That makes financial sense to me!
Let the Gov’t have a free loan and you get $650 back in May so you can get carpet or pay the doctor or get part of your house painted or you could get your truck fixed without having to charge it.
By The realist on Jan 31, 2010