Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Not paying off your credit card, or having enough cash to cover an emergency car repair, are problems but those are the problems, not the fact of getting a refund.

Getting a refund or not doesn't really affect anyone's financial situation so it's hard to see how it's the "stupidest thing to do financially".

+1. I can think of an untold number of more stupid things to do. Penny wise pound foolish armchair investors aplenty

Besides, if its true that the refund is valuable for a liquidity crunch then the inverse is true as well: if you end up owing money, and you spent all your cash you would end up paying penalties, fees, wages garnered, etc.

No, the inverse is not true. Simply owing money doesn't mean paying penalties, fees, or having wages garnished.

Much better to owe the government $250 in April than to get a $2,500 refund. Especially if you have CC debt, which someone foolish enough to try to get a windfall from Uncle Sam likely does.

You missed the point. I wasnt saying that owing money means you pay fees. My point was that if one argues that not getting a refund is a good thing so that you have money to pay for an unexpected expense, it implies that you wouldn't otherwise have had that money (otherwise whats the value of the liquidity?). If things are truly that tight for someone, then the inverse would be true - if you didnt get a refund so that you could cover some unexpected expense then you wont have money to cover the tax bill that comes.... and then you would be paying fees and fines. Put differently, whether you mismanage your finances by loading up your CC or by failing to pay your taxes, either way you are in trouble.

Moreover, why do you assume that you would only owe $250 but somehow get $2,500 in refunds? Why would the risk of underpaying be low but your risk of overwitholding is so high? What if it were the inverse - you get a $250 refund vs owing $2,500? A more reasonable argument would be to consider them equal in likelihood and in dollar amount.

Anonymous wrote:

Anonymous wrote:Not paying off your credit card, or having enough cash to cover an emergency car repair, are problems but those are the problems, not the fact of getting a refund.

Getting a refund or not doesn't really affect anyone's financial situation so it's hard to see how it's the "stupidest thing to do financially".

+1. I can think of an untold number of more stupid things to do. Penny wise pound foolish armchair investors aplenty

Besides, if its true that the refund is valuable for a liquidity crunch then the inverse is true as well: if you end up owing money, and you spent all your cash you would end up paying penalties, fees, wages garnered, etc.

No, the inverse is not true. Simply owing money doesn't mean paying penalties, fees, or having wages garnished.

Much better to owe the government $250 in April than to get a $2,500 refund. Especially if you have CC debt, which someone foolish enough to try to get a windfall from Uncle Sam likely does.

Anonymous wrote:Not paying off your credit card, or having enough cash to cover an emergency car repair, are problems but those are the problems, not the fact of getting a refund.

Getting a refund or not doesn't really affect anyone's financial situation so it's hard to see how it's the "stupidest thing to do financially".

+1. I can think of an untold number of more stupid things to do. Penny wise pound foolish armchair investors aplenty

Besides, if its true that the refund is valuable for a liquidity crunch then the inverse is true as well: if you end up owing money, and you spent all your cash you would end up paying penalties, fees, wages garnered, etc.

I think most of us have sufficient liquidity that a few hundred here or there doesn't make much difference.

Your brokerage account may be up this year, but may be down next.

Not paying off your credit card, or having enough cash to cover an emergency car repair, are problems but those are the problems, not the fact of getting a refund.

Getting a refund or not doesn't really affect anyone's financial situation so it's hard to see how it's the "stupidest thing to do financially".

Also, the returns on your brokerage account are pretty much irrelevant unless you are putting the cash from withholding there each week.

Also, I don't know about you, but my brokerage account is returning 19% so far this year.

Anonymous wrote:

Anonymous wrote:Getting a refund is just about the stupidest thing you could do finanically. Better to get the money through the year and save it if you're not spending it.

We don't have enough information really to answer your question (i.e. do you have a mortgage). But junior is worth one personal exemption and one child credit for you. If your marginal rate is 25% (you'd have to be closer to that $100,000 than not), that makes junior worth roughly $2,000 in actual tax savings. If you pay for day care, you can get an additionl child care credit on top of that.

But say it's just the $2,000. That's $167 more per month you could bring home in your taxes. I'm not exactly sure who that works out in terms of exempts to claim, but it's probably one or two more.

Here's a good formula (if you claim the standard deduction -- if you have a mortgage and itemize it's a different calculation):

http://taxes.about.com/od/paymentoptions/qt/Adjust-Tax-Withholding.htm

Again, strive to NOT have a refund. That's just stupid.

IMO this advice is way over the top (dare I say "stupid"). Sure back when interest rates were 5-10% it made sense to try and keep your refund down so you could earn interest on it, but these days no one is paying any interest on shortterm savings so it's really just a matter of personal preference. If you are the kind of person who will manage to actually save that extra $30 a week you might get with an extra exemption and you want to get that money each pay check then go ahead and try and cut it close, but a lot of people are not as disciplined and are actually better off with a little extra savings taken out each paycheck, which comes back in April (and then can be used for an i-bond if you want).

Plus with two working spouses it can be hard to get the withholding right. I would just do what you are doing-- works for you.

IMO, your opinion is idiotic. There's a lot more here than interest rates.

First of all, there's the issue of liquidity. You can achieve the same accumulation by telling your bank to siphon off the extra $166 (or whatever) into a savings account every month. Yeah, you may not get 6% interest, but if you have a car repair six months into the year you can tap the money that has been accumulated rather than put it on a cc (assuming there' s no other savings, which for many people who see tax refunds as a windfall there are not).

Which leads me to my other point: A lot of times people yearn for a refund to pay down their consumer debt. They don't have enough money during the month so run up CC cards. And CCs are definitely NOT charging 0% interest, even on the teaser programs.

Anonymous wrote:Getting a refund is just about the stupidest thing you could do finanically. Better to get the money through the year and save it if you're not spending it.

We don't have enough information really to answer your question (i.e. do you have a mortgage). But junior is worth one personal exemption and one child credit for you. If your marginal rate is 25% (you'd have to be closer to that $100,000 than not), that makes junior worth roughly $2,000 in actual tax savings. If you pay for day care, you can get an additionl child care credit on top of that.

But say it's just the $2,000. That's $167 more per month you could bring home in your taxes. I'm not exactly sure who that works out in terms of exempts to claim, but it's probably one or two more.

Here's a good formula (if you claim the standard deduction -- if you have a mortgage and itemize it's a different calculation):

http://taxes.about.com/od/paymentoptions/qt/Adjust-Tax-Withholding.htm

Again, strive to NOT have a refund. That's just stupid.

IMO this advice is way over the top (dare I say "stupid"). Sure back when interest rates were 5-10% it made sense to try and keep your refund down so you could earn interest on it, but these days no one is paying any interest on shortterm savings so it's really just a matter of personal preference. If you are the kind of person who will manage to actually save that extra $30 a week you might get with an extra exemption and you want to get that money each pay check then go ahead and try and cut it close, but a lot of people are not as disciplined and are actually better off with a little extra savings taken out each paycheck, which comes back in April (and then can be used for an i-bond if you want).

Plus with two working spouses it can be hard to get the withholding right. I would just do what you are doing-- works for you.

Get copies if your most recent paystubs, google IRS withholding calculator and it will tell you how to set them so that you don't owe or have an excessive refund.

Getting a refund is just about the stupidest thing you could do finanically. Better to get the money through the year and save it if you're not spending it.

We don't have enough information really to answer your question (i.e. do you have a mortgage). But junior is worth one personal exemption and one child credit for you. If your marginal rate is 25% (you'd have to be closer to that $100,000 than not), that makes junior worth roughly $2,000 in actual tax savings. If you pay for day care, you can get an additionl child care credit on top of that.

But say it's just the $2,000. That's $167 more per month you could bring home in your taxes. I'm not exactly sure who that works out in terms of exempts to claim, but it's probably one or two more.

Here's a good formula (if you claim the standard deduction -- if you have a mortgage and itemize it's a different calculation):

http://taxes.about.com/od/paymentoptions/qt/Adjust-Tax-Withholding.htm

Again, strive to NOT have a refund. That's just stupid.

We bought a new home this year and have 1 dd. I work part time and combined we make under 100k. I claim 0 and I think my husband either claims 1 or 0. He loves to get a refund. I do too but an accountant once told us we could claim up to
6(combined). What would you do?