What's everyone's plans for their Tax Refunds?

[❤ mollymouser ❤]

I'm embarrassed to admit how large our refund is.... but we never know in any given year what our charitable giving will be, nor do we know how often/when my wonderful DH will deploy to Iraq, triggering the CZTE. So there's just no simple way for us to tweak or adjust our withholdings ... so we get a refund.

Our refund will go to build up our savings account. Some of it will probably be used for a vacation.

[dianartemis]

If I get one, it won't be much. Last year I was around $200. So one can assume I'll be around that again. I'll put it in my "Visit Hawaii" fund.

[GirlGreen]

I usually only get one if there's some sort of credit I'm eligible for.

[Deleted]

Tires for the car

[gardenergirl]

We had a baby this year so we'll have that but I think we will still about break-even. Anything we do get back will go to pay down CC debt that I'm embarrased to say I have accumulated over the year.

[teen persuasion]

Jan 13, 2011 13:48:21 GMT -5 phil5185 said:

Through March 12, 2010, the average tax refund was a record $3,036, up $266 from the same period a year earlier, Shulman said in a statement.

Looks like the average filer got about $3000 refunded for 2009 (in 2010).
I wonder why people over-pay during the year, why not have an extra $250/m auto-deposited into a Roth (or something) a year earlier, and putting it where it can compound?
The difference between how people treat 'found' money vs 'earned' money is major. 'Found' money goes for reunion, new couch, trip to Hawaii - 'earned' money already went to avoid last year's credit card debt, etc.
(I haven't had a tax refund in over 25 yrs - I make sure of it.)

Not everyone overpays during the year - our refund will be due to refundable credits. There used to be advance EIC, but I read that they are doing away with it. Only 2% of those eligible actually signed up for it.

Our refunds will fund our ROTHs for this year.

[redwagon]

I've always put down "1" on my W-4. What do other married, no kids people put down? We just got married and I have no idea what I should change my withholding to...

[redwagon]

P.S. We will probably get about $4k back from Federal and $500 from state, so we obviously want to fix this for next year!

[constanz22]

Jan 14, 2011 22:16:58 GMT -5 redwagon said:

I've always put down "1" on my W-4. What do other married, no kids people put down? We just got married and I have no idea what I should change my withholding to...

Have you done the worksheets on the W-4? That is the best way to figure out what your withholding should be. There are way too many variables to just ask what other people who are married/no kids do. It depends on your spouses income, any credits or deductions you can/will take (which I know you have mortgage deduction). You really won't get an appropriate answer what YOU should claim from what others claim. It's a lot more complicated than that...

[redwagon]

So I've realized after using the google. yikes. I'll have to sit down with the IRS calculator after we figure our our taxes and deductions. thanks constanz!! taxes get more complicated when you get to be a "real adult" haha

[chiver78]

Jan 13, 2011 13:48:21 GMT -5 phil5185 said:

The difference between how people treat 'found' money vs 'earned' money is major. 'Found' money goes for reunion, new couch, trip to Hawaii - 'earned' money already went to avoid last year's credit card debt, etc.
(I haven't had a tax refund in over 25 yrs - I make sure of it.)

I think I'm hard-wired to react completely opposite to this observation. if I get a lump sum, I'll throw all of it at a CC. if I get a chunk of that each paycheck, I will skimp a little less on the day-to-day. backwards, I know, but that's how I roll. I am currently snowballing CCs, still have about $25k left to pay off. I wonder if my attitude about the refund will change once that's down to $0?

as far as my refund this year - I always plan to take (up to) $1k of it to pay off the balance of an annual* music cruise. I budget for the deposit when it comes up, then pay in full when the refund comes in. the rest goes to the next item on the snowball list.

*this is built into my annual budget, and is a trip I've taken since long before I dug my hole. it's a vacation/reunion/reset chiver/experience new artists and hear new music trip. I give myself a little less in the fun money all year in order to take this trip.

[suzwantstobefree]

Your trip sounds awesome Chiver!!! You know, a lot of us are apologizing for our splurges, but you only live once and your life should not only be about how little debt you have and how much money you can save

[paynointerest]

I'll be writing a big fat check to Uncle Sam...I prefer to make some money off of him rather than giving him an interest free loan.

[mrsgords]

We prefer to break even vs. loaning the government money interest-free all year. If we do manage to get a refund, we save it.

[cael]

Most will be put aside for our wedding this summer

[Frugal Nurse]

Jan 13, 2011 17:53:13 GMT -5 mommax4 said:

frugalnurse-have you looked into short-term disability insurance? It will usually cover pregnancy-related leave (6-8 weeks is typical). So long as you're not currently pregnant and don't get pregnant during the waiting period (usually 1-3 months) it can help cover your costs. I've used it twice and got 2/3 of my salary for 4 of the 6 weeks each time. That was through an employer sponsored plan, so I'm not sure what an individual plan would look like. It might be something to consider though.

I have looked into an individual short term disability plan, but in my state, none of them will cover maternity-related disability (individual insurance plans also will not cover maternity. Apparently in Kentucky, maternity is only covered for married people). I looked into Aflac, but the premium is so high, I could just pocket the money I'd spend on premiums every month and get the same amount of money that they'd pay in benefits, so it is kind of a waste.

[redwagon]

chiver - I'm much the same way. I'm afraid I will fritter away the extra in my paycheck, but the lump sum will go to savings and debt with a small amount for us for "fun." I'm hoping to get our withholding down so we still get maybe $1500 back next year.

[phil5185]

getting back about $1,500 and it's all going straight to the car loan.

Umm - and that is productive how?

[redwagon]

Phil - there's just something so satisfying about paying a large chunk of debt off in one fell swoop! I totally get it.

[chiver78]

Jan 15, 2011 9:04:39 GMT -5 Frugal Nurse said:

I have looked into an individual short term disability plan, but in my state, none of them will cover maternity-related disability (individual insurance plans also will not cover maternity. Apparently in Kentucky, maternity is only covered for married people).

do they think being married is the pre-requisite to finding yourself pregnant? sounds like a sex-ed course should be required for the insurance industry down there! hugs, frugalnurse

[chiver78]

Jan 14, 2011 23:16:44 GMT -5 @suzwantstobefree said:

Your trip sounds awesome Chiver!!! You know, a lot of us are apologizing for our splurges, but you only live once and your life should not only be about how little debt you have and how much money you can save

suz, it is by far the best.vacation.ever! I do the original, but you can google "sixthman" to find out the full spectrum of music cruises this company offers. they switched from artist management to full-time entertainment vacation management about 5 years ago. I think last year, there were 10 different cruises to choose from.

one little request - should any of you guys decide to book a cruise with these guys, can you PM me? I get a little bonus for anyone that uses me as a referral. I heartily recommend anyone that's interested to check it out (I've been traveling with them since 2003!), with or without the bonus, but I'll gladly take the bonus.

[Knee Deep in Water Chloe]

Jan 13, 2011 17:50:29 GMT -5 chicg said:

"I wonder why people over-pay during the year, why not have an extra $250/m auto-deposited into a Roth (or something) a year earlier, and putting it where it can compound?"
Phil - I think the fact that this is a get-out-of-debt Board vs an investment Board has a lot to do with that. You make complete sense but I would bet most people on WIR need the forced-savings. Many here struggle to get an EF established, I think if the money were earned throughout the year, it would not be applied to debt/svings as diligently as the lump sum. We all know how to do basic math, it's usually emotional spending, impulse, discipline where we messed up. The forced-savings helps remove those temptations which is also valuable.

Getting refund is not the most efficient use of the money, but when in debt the whole thing can be overwhelming!

I completely agree!!!

I'm not sure what we'll get back this year; we've got two rentals this year instead of one...long, not good story...so I'm not sure how that will affect things.
Last year we got $5500 back.

Our agreement is this:
Pay off Les Schwab (tires) account of $1100.
Of the remaining:
10% for Summer trip to Grand Canyon
10% for new suit(s) for my husband
30% for EF
50% for CC Debt

[NastyWoman]

Shouldn't be too much, but into my Roth it goes

[DVM gone riding]

I follow Phil and my cousin CPA's advice and plan for as small a return as possible. Last year I was so proud of myself I thought i had it figured out tight enough that I owed $250. But by the time TurboTax got done finding all the little credits I got $600 back-so I spent it all!

I expect this year to be somewhat similar but now thanks to wirr I have a plan for all such unexpected windfalls. a 1/3 goes to funding the Roth, 1/3 goes to future savings for taxes (I don't escrow property taxes) 1/6 I get to spend and 1/6 goes to paying down debt.

[DVM gone riding]

redwagon I am a SINK and I put down 3-4 on the w-4 I adjust some years depending on what I think I will make because the more I make the less credits I get for otherwise deductible things so then I need to have a higher amount withheld-I don't want to trigger the "penalty" but so far have not done that. I have never had a return over 1k

[ambellamy]

I'm using mine to help pay for my wedding in June.

I wouldn't have gotten a refund if I took the standard deduction, but this year i'm itemizing so i'm going to get back about 1300!

[writer88]

I'm an expat American (I live in Israel). Last year I used the Make Work Pay credit to pay my self-employment taxes. This year I made less than the taxable amount which means I'll be receiving the full $400 Make Work Pay credit in the form of a refund. I plan on tithing 10%, then I'll split the remainder into 3 equal portions: household expense fund, car repair fund, and clothes fund.

[suzwantstobefree]

The other thing you can do to trigger less of a refund is to have a "flat" amount taken out for taxes. I do this - I find my tax liability from the tax return from the prior year and divide that amount by the number of pay periods for the current year. It lowers the amount of the tax refund (mine isn't perfect since I have a rental home and I itemize so it may change from year to year) but it also guarantees I will not be penalized if I owe since I will have paid 100% of the tax owed for the prior year. If you are a high income earner use 110% of the tax liability from the prior year to avoid penalties.

[twinmama85]

Going to buy an Amish made entertainment center ( I just REALLY HATE faux wood that falls apart after about 5 years ) and the rest is going towards our trip to [glow=blue,2,300]Hawaii [/glow] in Sept.

[dcmetrocrab]

No idea if I'll get one this year (haven't done the calculations yet, and I got one last year because I was unemployed for 4 months of the year). If I do, I think I'll blow it all on more clothes versus saving or use it on a trip to Boston or NYC. I'm in a saving fatigue after hardcore budgeting for what feels like forever.