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Income Taxes!

Awesomeness!!

By Awesomeness!!,
in Huddle Lounge

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Awesomeness!! Newbie

Awesomeness!!

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So, what are you guys gonna do with your income tax check? (Assuming you're not a freeloader and have a job, and or don't owe!). Usually I blow my money over time on stupid crap but this year I think me and the MS will just go to the Mall and blow it all in one single swoop. (We've been really blessed this year money wise). What about you guys?

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CarolinaNCSU Proficient

CarolinaNCSU

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A question since it's been alluded to in this thread...

 

 

I'm young (just turned 23), and have only ever worked part time. I've always gotten money back from taxes being single, young, etc. But, I've also seen people, like in this thread, say they don't want a refund. I assume because it means you're not paying as much throughout the year? What are the benefits or "what does it mean" in essence to not get a refund back? 

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Awesomeness!! Newbie

Awesomeness!!

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A question since it's been alluded to in this thread...

I'm young (just turned 23), and have only ever worked part time. I've always gotten money back from taxes being single, young, etc. But, I've also seen people, like in this thread, say they don't want a refund. I assume because it means you're not paying as much throughout the year? What are the benefits or "what does it mean" in essence to not get a refund back?

In the long run you keep more of your money. A lot of people prefer it that way. Others like a big lump sum at the beginning of the year. Just depends on your preference. Personally, I like the lump sum.

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PanthersFanNY Newbie

PanthersFanNY

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You don't get more money either way.

 

If you get a big refund, then you've basically just allowed the government to hold onto your money throughout the year. If you don't get a big refund, it just means you got a little more money in your paycheck throughout the year because less income tax is withheld from it.

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KSpan Grand Master

KSpan

Posted
Posted

A question since it's been alluded to in this thread...

I'm young (just turned 23), and have only ever worked part time. I've always gotten money back from taxes being single, young, etc. But, I've also seen people, like in this thread, say they don't want a refund. I assume because it means you're not paying as much throughout the year? What are the benefits or "what does it mean" in essence to not get a refund back?

In practical terms, a tax refund is basically an interest-free loan that a taxpayer extends to the government. Since it is legally the taxpayer's money and the government pays nothing beyond the overage itself, there is an opportunity cost to the taxpayer since they could have been doing something 'productive' with that money throughout the year (invest it, pay down debt, etc.).
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Panthro Community Regular

Panthro

Posted
Posted

In practical terms, a tax refund is basically an interest-free loan that a taxpayer extends to the government. Since it is legally the taxpayer's money and the government pays nothing beyond the oberage itself, there is an opportunity cost to the taxpayer since they could have been doing something 'productive' with that money throughout the year (invest it, pay down debt, etc.).

Im quoting you but responding to the theory

While this is true in essence it does not take into account human nature. Not many people are going to invest that extra couple thousand and earn another 7-8% on it over the year. It also bases it on having that couple thousand from the beginning vs a couple hundred buck every month added to the kitty...so it's even less a return. Most people would likely spend it....so I see nothing wrong with carrying an overage balance if you do something productive with the money like invest in a roth ira or make a home/life improvement.

 

It's no different then having a 0% savings account or a piggy bank.

 

Now tell me the horrors of a piggy bank....omg bacon inflation

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pstall Newbie

pstall

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Im quoting you but responding to the theory

While this is true in essence it does not take into account human nature. Not many people are going to invest that extra couple thousand and earn another 7-8% on it over the year. It also bases it on having that couple thousand from the beginning vs a couple hundred buck every month added to the kitty...so it's even less a return. Most people would likely spend it....so I see nothing wrong with carrying an overage balance if you do something productive with the money like invest in a roth ira or make a home/life improvement.

 

It's no different then having a 0% savings account or a piggy bank.

 

Now tell me the horrors of a piggy bank....omg bacon inflation

 

human nature also applies to congress that they will take YOUR overage and properly allocate it.

 

there is a real time impact of money on hand weekly or monthly to offset bills/food etc as opposed to being lulled into the forced savings aspect come refund time.

 

i see what you mean but this is why more people need to feel empowered to take control of their own finances and be proactive.

 

the flip side is assuming people will properly doing something with the refund when they get it. some might. some may not.

 

i sorta like trying to control my own destiny a little.

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