87% of Taxpayers are getting refunds for 2010

[phil5185]

Saw this in the Paper at noon - of the tax returns already processed for 2010, the IRS reported that 87% are getting refunds. Elsewhere it said that the average Federal refund is about $3000.

Baffling - why do 9 out of 10 americans do that? Our Fed tax bill for 2010 was about $15,000 - why would I prepay $18,000 during the year and then wait for $3000 of it to be refunded? (I do the opposite - prepay about $12k and pay the final $3000 now).

[bean29]

Well Phil,

If it makes you feel better, I am not in the 87%.

[thyme4change]

Maybe all of us that owe several thousand dollars are waiting until Monday to file.

[brdsl]

thyme,



I am one of that number....payer.

[runewell]

In my case, my federal witholding # of exemptions was maxxed out but I got a nice bonus check in March that was taxed to death and I simply can't get my hands on the overtaxed money until I file my taxes the next year. If I could, I would aim for a tax liability give or take around $0.

[qofcc]

I'm getting a refund of a couple hundred because it's very difficult to estimate withholding exactly and I'd rather get a little back then owe. Even when we had self employment income, I had all of the taxes taken through payroll withholding to avoid estimated quarterly payments.


I would suspect that the people getting thousands back are getting the EIC or other refundable credits.

[thyme4change]

I'm getting a return from state. My state does a percentage of federal - so I owe to fed and get from the state. I'm not sure how to change my withholdings to make it right - so I just go with it. Net I still pay, so I figure YM isn't coming after me with torches and shit.

[ambellamy]

If I itemize, i get a refund. If I don't I hit even or within 200-300 dollars. I'd rather get a bit back if i'm able to itemize, instead of owe if i'm not able to...

[Deleted]

We also got a refund this year and last... But we did finally change our witholdings a couple weeks ago.

We will see how it pans out next year.

[raeoflyte]

My dad is a CPA and has done personal tax returns for(ever) years.

His thinking on refunds has changed. He figures it is the only way most people (87% I guess) ever have a sizeable amount of money to do something with. He doesn't plan refunds for himself of course, but he figures for people who would piss away $250 a month without blinking it's better to have a forced savings account.

I still haven't mastered the art of $0 refund. I thought I had it down last year and had prepared dh that we would probably owe up to $300 and we ended up with 2k back... This year I'll see if I can estimate the schedule E better.

[Deleted]

I wonder if more people will get refunds now that the advance EIC has been stopped?

[Malarky]

I got it within $300 this year. I thought that was pretty good given that I keep doing stuff to the house that qualify for tax credits. I upgrade for other reasons so I see it as a bonus.

[hurley1980]

I bought a house in late 2009 and last year was the first full year of payments on it. I didnt know how much that would affect my taxes. Usually I'm within a couple hundred dollars, but this year I got almost $1100 back. Sometimes shit happens....

[NomoreDramaQ1015]

We usually break even or owe. This year we got $1500 because of having a baby.

We get back every year from Nebraska, but then owe pretty much the same amount to Iowa so it is a wash. I'd love to adjust it but it's a fixed %, I can't play with the numbers so I give less to NE and more to IA.

[illinicheme]

I've gotten huge refunds in 2009 and 2010 because both DH and I switched jobs (me twice), moved across the country, sold house, bought house, etc. I chose to over-withhold just to make sure I didn't end up paying any penalties along the way, especially with multiple state tax returns. It was easier for peace of mind. I also ended up having social security overwithheld by over $2000 in both 2009 and 2010 due to the job changes.

Now that 2011 should be pretty simple (two W2s, one state, no moving), I'm going to try and do a better estimate and adjust our withholding accordingly going forward.

[oreo]

I think people who owe file at the last minute. That's what I did in the past.

I thought for sure I was going to owe this year because I took pretty high withholdings since I didn't expect to be working the whole year. Then I DID work the whole year and I thought I'd owe. Turns out I'm getting over $2K back from both fed and state. I adjusted my withholdings now so next year I'll get back less. I guess because the company I work for is out of state they can't handle the state-specific withholding form so I don't seem to have any control over that. I'd much rather owe the state money than get a refund since that only adds to next year's federal tax burden.

[shanendoah]

I didn't file until Tuesday evening, so there's a good chance I'm not included in their figures. We owed this year. We knew we would because DH didn't have any taxes taken out of UE, though we did end up owing less than expected.
Who knows what next year will look like, with UE ending in late June, DH being in school, and maybe he'll even get work study. So I'm just leaving things as they are.
I was annoyed that we couldn't get credit for DH being back in school this January, even though classes that begin in January are considered part of 2010 for tax purposes. If we'd been able to pay for his class in December, we could have taken the credit, but because we couldn't pay until January (because the school wouldn't enroll him in the class until after he got the teacher's permission on the first night of class) and because he wasn't in classes in fall, no credit for 2010 and it won't count toward 2011 at all, either.

[973beachbum]

We have self employment income and it is normally a crap shoot if we are the winshield or the bug. Last year we were the bug and paid . I thought I had it just right and we ended up with some big losses that made the Gov owe us $5K.

I wish we hadn't gotten that big a check from them this year.

[robbase]

Phil some people would challenge your assumption - people will save / invest or do something "worthwhile" if they got their $3,000 ($250 per month) throughout the year vs. getting a lump sum $3,000 at the end of the year

most people would frither it away and they know it, I know I am in that category. So I welcome a tax return, it forces me to save and it only "costs" me about $140 (assuming I invested my $250 per month in one of your magical 10% products I would end up with $3,140 at year end instead of my $3,000 tax refund)

so my choice based on my personality is -

1) "pay" zero and end up wth nothing usefull (an extra $250 frithered away each month on nonsense)

or

2) "pay" $140 and have $3,000 to show for it at the end of the year

for me it is choice 2 all day every day. But I know I am going to YM hell for doing this. Also it is double blashemy for me to not follow the YM hero Phil's advice (especially so soon after his birthday)

[qofcc]

$3,000/yr is $250/mo. A passbook savings account at 1% interest compounded monthly would pay $16.29 in interest for the year. Many modest income people use the amount of their tax refund as the budget for a big ticket item they’re going to purchase (vacation, used car, appliances, furniture, etc.) not to add to long term investment accounts. It’s probably worth it to them to forgo the tiny bit of interest in order to have forced savings. These are probably the same people who would be tempted to spend that money on a carton of cigarettes or dinner and a movie every week if they had it in their pocket.

[resolution]

We got $2000 back, which was unexpected. There were no refundable credits or anything like that. It was also the first time that we used an accountant to do our taxes because things got very complicated this year. I am not 100% confident that the refund amount was correct but I don't really want to hire another accountant to check the first accountant's work.

[Savoir Faire-Demogague in NJ]

I paid some to the Fed, got back a few hundred from NY State, and paid NJ a few hundred.

[Savoir Faire-Demogague in NJ]

$3,000/yr is $250/mo. A passbook savings account at 1% interest compounded monthly would pay $16.29 in interest for the year. Many modest income people use the amount of their tax refund as the budget for a big ticket item they’re going to purchase (vacation, used car, appliances, furniture, etc.) not to add to long term investment accounts. It’s probably worth it to them to forgo the tiny bit of interest in order to have forced savings. These are probably the same people who would be tempted to spend that money on a carton of cigarettes or dinner and a movie every week if they had it in their pocket.

They could also use the $250 per month to keep their credit card debt paid off, and/or accelerate any other consumer debt such as auto loans. They could also put the $250 per month into an IRA or Roth.

[robbase]

They could also use the $250 per month to keep their credit card debt paid off, and/or accelerate any other consumer debt such as auto loans. They could also put the $250 per month into an IRA or Roth.

but again, as I mentioned above you are assuming people will make worthwhile use of their "extra" $250 per month and not buy more Starbucks, dinners out, etc..... most people are not wired this way

[Tiny]

I am truly beginning to believe that most people don't think of their refund as money they GAVE to the Government only to have it given back to them. I'm beginning to believe that many people think the money they are getting back is actual 'extra money' and not money they didn't already have at one point.

I think there's a disconnect for most people between the deductions on their paystub and their refund.

I had the 'previlege' of listening to 4 women 'squee' together over their refunds and one even told a tale of how her 'tax preparer' squeezed out alittle extra return for them this year... One of the women seemed to feel cheated (or maybe she was just feeling really special)? because she "couldn't file her taxes until AFTER Feb 14th because she has 'deductions' (um, ok, you've got a house - with a mortgage and property taxes... ) I'm not sure if this was just some form faux emotion to facilitate 'bonding' (like over designer shoes??) or if they really really don't get it. I smiled and nodded alot and tried not to make eye contact -- I would have backed away slowly but it was a dinner get together...

[Tiny]

I don't think people view their tax refund as SAVINGS - most people who talk about their refund have some plan to spend their 'windfall' - not save it!

[Tiny]

[qoute] I would suspect that the people getting thousands back are getting the EIC or other refundable credits. [/quote]
If I'm to believe the 4 women from dinner - I'd disagree with you on this. Two of them are single, own their own homes, work full time. The other 2 are DINKs (double income no kids) with houses. None of them own rental property (or have a personal business) as far as I know (or can tell). And while no one came out and said exactly how much they were getting - it was easy to assume at least 2K...

Back in my pre-YM days I too use to routinely get 2K to 2500 back in a refund each year... only deductions were interest, property taxes, charitable contributions....

[lynnerself]

Were getting back $1800 from the feds, but this is the last year we can claim the $2500 college credit. So we will be paying again in the future.

[Deleted]

I agree with oreo... We owe... they will go out tomorrow... I'd think those who are getting a return are more likely to have handed them in already..

[❤ mollymouser ❤]

We got a refund ~ it's hard to figure out my wonderful DH's withholdings when we're never sure how often he will deploy and trigger the CZTE, and we usually don't know exactly what our charitable giving will end up being for the year ~ until late December.