Are you Looking for a Large Refund?

[moneymatters]

we're expecting about a $600 refund this year. Last year we ended up having to pay about $1000, which wasn't a nice surprise. Ended up that my wife's work wasn't withholding enough and it bumped us up a tax bracket. We adjusted, and this year we came out with a refund. Maybe just a little tinkering and we can just break even.

[beancounter]

Originally Posted by bluecobia

I am hoping for a small refund. I adjusted my deduction to try to make it that way. I do not like giving the IRS more money than they deserve. However sometimes it is hard to estimate from year to year how much you need to have deducted. The fluctuating stock market and house sales and purchases can have a major effect.

Ditto. Even if I wind up owing money, I still saved as the money was in a high yielding interest bearing account and didn't lend the Govt. an interest free loan.

[rorich]

Originally Posted by beancounter

Ditto. Even if I wind up owing money, I still saved as the money was in a high yielding interest bearing account and didn't lend the Govt. an interest free loan.

This is a good idea. However, many people do the same thing just to get the extra money per paycheck. Often times, this money gets spent. I guess using a forced savings would be ideal for the average joe to ensure that you don't spend that "extra" money. On the other hand, those who can't commit to a forced savings may consider getting a large tax refund thir "forced savings". The downside maybe that they'd have given the Govt. an interest free loan.

[rorich]

From the looks of the poll results so far, it seems as though most people will get a refund of $1000 or less. How many people anticipate a rebate check ?

[rstlne]

Originally Posted by rorich

Just playing devils advocate here:

If by looking for a large refund means that we’re giving the IRS an interest free loan, and it is better to see more money in your paycheck instead, then don’t you think that the average Joe would have spent that money anyway? Does anyone look at this as “savings” or a “Su-Su” — is it better to receive a refund (with no interest) than to have no money at all?

Yes, forced savings is one way for people who lack financial discipline to save money. In that sense, it's better to withhold more money to get some back at tax-time than to blow it all on frivolous spending throughout the year. However, they can get the same effect by setting up direct deposit so that a portion of their paycheck goes to an online savings account.