Are you Looking for a Large Refund?

[Milehimama]

We always get a large refund, due largely to various credits. It's kind of our "savings account" for large purchases - this year, we're buying a new dryer and a new dining room set (we outgrew the old one.)

7 children under the age of 10 is expensive day-to-day, but it's a huge bonus at tax time!

[Anthony Marrone]

I hope that no one who claims any of the following deductions and is hoping for a refund expects to file before Feb. 11, 2008; the IRS will not accept your return if you claim: mortgage interest deductions, child care expenses, education credits, home energy deductions or Washington D.C. first-time homebuyer deductions. Obviously, I've removed the legalese, but these areas were all effected by the AMT-patch signed into law December 26, 2007, and the IRS will not even accept returns before Feb. 11 if you file with any of the above deductions. Expect refunds to take much longer than usual...

[rorich]

Originally Posted by amarrone

the IRS will not accept your return if you claim: mortgage interest deductions, child care expenses, education credits, home energy deductions or Washington D.C. first-time homebuyer deductions. Obviously, I've removed the legalese, but these areas were all effected by the AMT-patch signed into law December 26, 2007, and the IRS will not even accept returns before Feb. 11 if you file with any of the above deductions. Expect refunds to take much longer than usual...

This is indeed useful information. This way, anyone planning to use these deductions, but having plans for their anticpated refunds, won't pull their hair out hoping for the funds to arrive. Knowing in advance can help one arrange for a contingency plan.

[farley2k]

Originally Posted by rorich

Imagine your refund is $1,200. If you had adjusted your withholding to get an extra $100 per month and put that $100 in a high yield savings account, for example, you could have pocketed more money.

That is never how money seems to flow in my life. If I had an extra $100 each month I would find something to spend it on - oh not frivolously but on a car repair, or a set of new tires, or some such thing. Getting a big tax refund allows me to have a big chunk which I can use for a single purpose rather that being nickeled and dimed over the year.

[rolltimer]

I generally get a very small Federal refund which I then get to "share" with my state department of revenue. The Feds seem to have slowly increased personal deductions and exemptions over time while my state has not. This past year I worked some as an independent contractor so I get the joy of paying 15% social security tax. What hurts is not knowing or being able to estimate taxable income because I typically get some dividends and capital gains payouts from mutual funds late in December in amounts that vary from year to year. How can I pay estimated tax throughout the year when its impossible to know until November at the earliest when the mutual fund companies give out estimates of year end payouts?

[stormy]

I usually try to make sure I owe about $100. However, this year I sold a bunch of stock and due to a tax form screw up, they withheld 30+% taxes! (On stock I had held with that company for over five years!) They said there was no way to get it back until I filed taxes ...

[jdp]

I try to get as close to $0 as possible to the point I don't mind owing a little at tax time. It started with my desire to build up an emergency fund that wasn't happening on my normal budget. So I calculated the difference in my paychecks at the different withholding levels and did the sort of "fake myself out" thing and set up an autodeduction from checking to savings for the difference. I was used to living on the old paycheck then blowing a refund on something stupid, it was just too hard to resist that large sum of money and spending it so the only shock this way was getting over my sadness when everyone else talked about what they were doing with their big refunds. But that didn't last long when my sis lamented buying some fancy t.v. at tax refund time but then didn't have money for something her health insurance wouldn't cover. Then my silly emergency fund trick didn't seem so silly.

[rstlne]

Originally Posted by rolltimer

How can I pay estimated tax throughout the year when its impossible to know until November at the earliest when the mutual fund companies give out estimates of year end payouts?

To avoid penalty, you need only pay in estimated taxes 100% (or 110% if the amount is greater than $150K) of the amount on the previous year's tax return. If you get more mutual fund distributions than expected, that will of course be an underpayment but not with a penalty. Or you can pay the estimated taxes on mutual fund distributions in your last quarterly estimated tax payment by January 15th, which is too late now.

This is going to hit a lot of investors at tax time because I noticed that many mutual funds declared large distributions (some amounting to over 20% of the fund's assets) in December 2007. I expected that to happen because we've had a bull market for over 4 years and fund managers had to scramble to get out of volatile positions with huge unrealized capital gains when market sentiment changed mid-year.

[girlfromsouth]

Ugh. I'm going to owe this year - because my withholding is messed up and I think I'm currently too little. This is weird, because I know that I filled the forms out correctly and I think my new company screwed up. NOT looking forward to tax time this year!!

[MSMomsmoney]

Getting $16.