Author Topic: Badass Tax Refund!  (Read 3295 times)

aaahhrealmarcus

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Badass Tax Refund!
« on: March 09, 2017, 12:28:09 PM »
This was my first year trying to max my pre-tax 401k contributions, and while I didn't quite make it to $18,000 ($13,629.72) due to starting low and being sheepish at the beginning of 2016, I did manage to get money back this year to the tune of $917! I'm sure that's chump change to a lot of people here, but I'm used to paying in or getting nothing, so getting almost a $1000 refund was a big deal! I've also never saved that much in a single year. Not even close!

Anyone else have a badass tax refund they're proud of and want to share?
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BeginnerStache

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Re: Badass Tax Refund!
« Reply #1 on: March 09, 2017, 12:30:47 PM »
I actually despise getting money back, although we do every year. It just means I gave the government a free loan.

Optimiser

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Re: Badass Tax Refund!
« Reply #2 on: March 09, 2017, 12:53:47 PM »
Big 401(k) contribution - Badass

Interest free loan to the gov't - Not so badass

If you're going to keep putting a lot of money into the 401(k) change your withholdings so you pay less in taxes each month. That will help you get closer to maxing out your 401(k) this year.

iowajes

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Re: Badass Tax Refund!
« Reply #3 on: March 09, 2017, 01:01:28 PM »
I'm always disappointed if I get more than $100 back. Means I did something wrong in the paperwork.  I'd much rather pay, though I like to be as close to zero as possible.

englishteacheralex

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Re: Badass Tax Refund!
« Reply #4 on: March 09, 2017, 01:05:18 PM »
A badass tax refund is $0. That means you adjusted your withholding perfectly and never gave the gov't an interest-free loan.

We had a $2300 tax refund but that's because our daughter came early. And...even though I know you're supposed to zero out your taxes or even owe the gov't because mathematically it's better, I always prefer getting the refund. Even though it's mathematically stupid. We owed last year and actually had accounted for it, putting the money in a separate savings account, but it still wasn't as fun as I thought it would be.

aaahhrealmarcus

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Re: Badass Tax Refund!
« Reply #5 on: March 09, 2017, 02:36:54 PM »
Big 401(k) contribution - Badass

Interest free loan to the gov't - Not so badass

If you're going to keep putting a lot of money into the 401(k) change your withholdings so you pay less in taxes each month. That will help you get closer to maxing out your 401(k) this year.

Hmm... I hadn't looked at it that way, but you're right. I wasn't so much excited about a bigger refund (though I do plan on investing 100% of it,) more for the fact that last year I paid $8,378.67 in taxes and got nothing back. This time I paid $8,133.91 and got $917 back, despite earning quite a bit more, so I paid a lot less in overall.

But I obviously have some work to do on my withholdings.
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ducky19

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Re: Badass Tax Refund!
« Reply #6 on: March 09, 2017, 02:42:38 PM »
I withhold more than necessary so that I don't need to pay estimated taxes on my numerous side gigs. Otherwise, I would try to get it exact or even owe. This year's refund was $417, so didn't do too bad.

Dicey

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Re: Badass Tax Refund!
« Reply #7 on: March 10, 2017, 07:58:50 AM »
Last year we flipped a house for fun and profit, so we owed a fat wad of taxes. However, the fine state of CA requires a big chunk of the proceeds (30%, IIRC) be withheld at closing. Happily, the excess was roughly equal to what we owed the feds. Or vice versa, but I'm too lazy to get up and check. Either way, the numbers were big, so it was a relief when both sides balanced out.

Due to a number of factors, we use a CPA. Our sweet spot is when we get just enough back to cover his fee. He knows this and he's good, so even if we have to write a check or two, it all comes out in the wash.

We hate over withholding.  Big, fat refunds are for chumps!
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runewell

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Re: Badass Tax Refund!
« Reply #8 on: March 10, 2017, 08:14:05 AM »
I aim to have my federal refund <$1,000.  I don't care if I give the government a small interest free loan as I am already giving Wells-Fargo a continual $5,000-$10,000 loan with all the money sitting in my checking account.
« Last Edit: March 10, 2017, 08:40:22 AM by runewell »

Dicey

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Re: Badass Tax Refund!
« Reply #9 on: March 10, 2017, 09:25:24 AM »
I aim to have my federal refund <$1,000.  I don't care if I give the government a small interest free loan as I am already giving Wells-Fargo a continual $5,000-$10,000 loan with all the money sitting in my checking account.
You can access the checking account at will. Huge difference.
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Fireball

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Re: Badass Tax Refund!
« Reply #10 on: March 10, 2017, 11:36:32 AM »
Our refund was $473 which is our lowest of all time. Happy in the direction we're going!

marielle

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Re: Badass Tax Refund!
« Reply #11 on: March 10, 2017, 11:48:34 AM »
I ended up getting back $3500 because of the American Opportunity Tax credit. Oops. I feel like an idiot. I only made 1/3 of my salary last year, so my withholding was calculated incorrectly. I tried to adjust my W4 to claim a 9 for a few paychecks, but I had no idea about the tax credit so I still got back way too much.

No 401k option for me though. :(

Hotstreak

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Re: Badass Tax Refund!
« Reply #12 on: March 10, 2017, 06:16:08 PM »
I ended up owing the State some money and getting a refund from the Fed's, for a total net refund of around $100.

WhiteTrashCash

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Re: Badass Tax Refund!
« Reply #13 on: March 10, 2017, 06:41:33 PM »
I personally think it's kind of difficult to perfectly predict your tax return at the beginning of the year, so I just want to applaud the OP on a job well done. Now that you have a year of heavy 401k investment under your belt, you have a better idea of how to structure your withholdings for next year. :-)

human

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Re: Badass Tax Refund!
« Reply #14 on: March 10, 2017, 07:37:58 PM »
I got a little over 6 grand back, but there's no way I'm messing with deductions with the Phoenix pay fiasco (gov employee pay system in Canada) still going on and I'll be using up all my unused rrsp room this year so it won't matter next year.

lchu

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Re: Badass Tax Refund!
« Reply #15 on: March 11, 2017, 09:55:34 AM »
Hey, congrats!  You said it was your first year of doing 401K contributions, right?  So, congratulations for making those contributions during the year and then for doing your own taxes and uncovering more ideas for how to optimize them in the coming years!

I thought I had my taxes pretty well optimized.  Then I got married and didn't realize I should change our withholding (dual-income family), so we ended up with a $2,000 refund last year.

Then this year, we received a bump to our income from a small inheritance windfall and erred on the side of over-withholding since it pushed us into a higher tax bracket.  Then we bought a house in the same year.  Long story short, we're getting around $7K back (!!!!).  As others have said, I'm not happy that I gave an interest-free loan to the feds (and, in turn, paid more in interest on my student loans), but I am excited that this money will advance my goal of paying off my student loan debt to the end of the school year instead of the end of the calendar year.

It has made me realize that my taxes can also be an area that I can optimize -- for a really long time, I was focused on just earning enough money and cutting my spending enough to survive!  Now, there's a whole new game to learn how to play and it takes time to figure it out!

MisterTwoForty

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Re: Badass Tax Refund!
« Reply #16 on: March 11, 2017, 04:48:47 PM »
I normally pay in as well.  This year I will receive back just over $1,000.  I do my own taxes, so it feels good to gt 'paid' for my work.

All of it going to mutual funds.

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Re: Badass Tax Refund!
« Reply #17 on: March 11, 2017, 06:30:48 PM »
Big 401(k) contribution - Badass

Interest free loan to the gov't - Not so badass

If you're going to keep putting a lot of money into the 401(k) change your withholdings so you pay less in taxes each month. That will help you get closer to maxing out your 401(k) this year.

Hmm... I hadn't looked at it that way, but you're right. I wasn't so much excited about a bigger refund (though I do plan on investing 100% of it,) more for the fact that last year I paid $8,378.67 in taxes and got nothing back. This time I paid $8,133.91 and got $917 back, despite earning quite a bit more, so I paid a lot less in overall.

But I obviously have some work to do on my withholdings.

Since you are investing the refund instead of blowing it, I think it's in the badass category.
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Heckler

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Re: Badass Tax Refund!
« Reply #18 on: March 12, 2017, 02:03:52 PM »
Big 401(k) contribution - Badass

Interest free loan to the gov't - Not so badass

If you're going to keep putting a lot of money into the 401(k) change your withholdings so you pay less in taxes each month. That will help you get closer to maxing out your 401(k) this year.

Hmm... I hadn't looked at it that way, but you're right. I wasn't so much excited about a bigger refund (though I do plan on investing 100% of it,) more for the fact that last year I paid $8,378.67 in taxes and got nothing back. This time I paid $8,133.91 and got $917 back, despite earning quite a bit more, so I paid a lot less in overall.

But I obviously have some work to do on my withholdings.

The big question is what will you do with your refund?

Warlord1986

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Re: Badass Tax Refund!
« Reply #19 on: March 13, 2017, 08:34:28 AM »
I owe the state of South Carolina $32 and the Federal Government owes me $232.

runewell

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Re: Badass Tax Refund!
« Reply #20 on: March 14, 2017, 11:13:01 AM »
I aim to have my federal refund <$1,000.  I don't care if I give the government a small interest free loan as I am already giving Wells-Fargo a continual $5,000-$10,000 loan with all the money sitting in my checking account.
You can access the checking account at will. Huge difference.

Huh?  What is that supposed to mean?  If I were desperate for that $1,000 I could try to adjust my withholding.  But I have side income that I pay self-employment taxes on.  With a 6-figure income I'm really not stressed out about whether I pay $1,000 or receive $1,000 at year's end.

aaahhrealmarcus

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Re: Badass Tax Refund!
« Reply #21 on: March 14, 2017, 12:17:14 PM »
The big question is what will you do with your refund?

Well I say "invest," but in reality I'm paying the last of my consumer debt. I bought a subsidized vehicle 3 years ago - I know, big mistake! - and it's almost paid off. I also adjusted my withholdings, so this time next year I should have zero debt and hopefully a minimal or negative refund!
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Dicey

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Re: Badass Tax Refund!
« Reply #22 on: March 15, 2017, 04:18:35 AM »
I aim to have my federal refund <$1,000.  I don't care if I give the government a small interest free loan as I am already giving Wells-Fargo a continual $5,000-$10,000 loan with all the money sitting in my checking account.
You can access the checking account at will. Huge difference.

Huh?  What is that supposed to mean?  If I were desperate for that $1,000 I could try to adjust my withholding.  But I have side income that I pay self-employment taxes on.  With a 6-figure income I'm really not stressed out about whether I pay $1,000 or receive $1,000 at year's end.
It means you can get to the Wells Fargo money a lot easier if needed. While it's clearly not paying much more than the zero the feds pay on over withheld money, you can access it at will, so that's worth something, imo. It was not a criticism, just an observation. Hope this helps.
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SweetLife

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Re: Badass Tax Refund!
« Reply #23 on: March 15, 2017, 06:20:40 AM »
Last year I paid $1000, this year I got back just over $3600 - but that was due to paying for a survey of our (family owned) rental farm that was over $6500 (split three ways) so there was a loss on revenue.

Used the refund the minute it hit my bank to pay off more of my debt :)

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Re: Badass Tax Refund!
« Reply #24 on: March 16, 2017, 12:47:28 PM »
My federal refund was $18 this year. Closest I ever got to zero.

Car Jack

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Re: Badass Tax Refund!
« Reply #25 on: March 16, 2017, 12:59:00 PM »
About $1700 back in total fed and state.  It'll melt into my general shenanigans of fund house bonus/referral openings, Redneck Bank deposits and other nonsense.  Last month had Stop & Shop gas points for visa card purchases so those credit card bills will come home to roost.  Gotta love gas for 61 cents and lotsa credit card bonus money.

2Birds1Stone

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Re: Badass Tax Refund!
« Reply #26 on: March 16, 2017, 01:18:04 PM »
THe most badass refund would be <$1
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marielle

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Re: Badass Tax Refund!
« Reply #27 on: March 16, 2017, 02:07:56 PM »
THe most badass refund would be <$1

Wouldn't it be to owe $1000, because it's penalty free at that amount and the government basically gave you an interest free loan?

marty998

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Re: Badass Tax Refund!
« Reply #28 on: March 16, 2017, 03:22:19 PM »
THe most badass refund would be <$1

Ahh closest Ive gotten was a $2.31 refund. Nowadays I get a bigger one. Paying a lot more tax but also have some rather large rental property deductions.... I'm one of those evil negative gearers people like to bash :)

Daisy

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Re: Badass Tax Refund!
« Reply #29 on: March 16, 2017, 09:54:24 PM »
I got my tax payment down to less than $100. Which was weird because I had more dividends than expected.

Last year I had to extend filing and pre paid $1000 when extended just in case I owed taxes. But then when I actually did my taxes later in the year, it turns out I had withheld correctly and got almost close to $1000 back.

I'm  pretty good with tracking income, deductions, and tax payments in a spreadsheet. At the beginning of the year, I set a fixed small amount in my W4 as I am frontloading my  401k. Then mid year after maxing out the 401k, I calculate how much tax I need to take out of each paycheck to hit my tax payments just right and update the W4  for a new fixed withdrawal for the rest of the year.

I use the moneychimp website to calculate expected tax amount.

My goal is $0 tax payment and $0 refund, and I have come pretty close the last two years!

moof

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Re: Badass Tax Refund!
« Reply #30 on: March 16, 2017, 10:14:12 PM »
Had a $3400 refund.  Kicking myself for not getting my deductions right.  So I immediately bumped up my exemptions on the W4 to get 2017 closer to zero.

My personal goal is to have as much as I can in the market at all times.  The refund means that I left $3400 out of the market for 6 months on average, costing me about $300 last year had it been riding the 20% wave for 6 months.  Oh well.  Shoved it into the wife's spousal IRA to nearly max it out (and allow Admiral share conversion) the day it cleared the bank.

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Re: Badass Tax Refund!
« Reply #31 on: March 17, 2017, 03:36:50 AM »
Good job OP - on the right path. I also saw the benefits of tax advantages investing... Last year I switched from Roth IRA to traditional because of these forums and all my raise went to 401k (still progressing on maxing that). Those changes did result in a bigger refund since I didn't change my withholding but live and learn...After finishing my taxes I submitted the form to make the adjustments.

I aim to have my federal refund <$1,000.  I don't care if I give the government a small interest free loan as I am already giving Wells-Fargo a continual $5,000-$10,000 loan with all the money sitting in my checking account.
You can access the checking account at will. Huge difference.

Huh?  What is that supposed to mean?  If I were desperate for that $1,000 I could try to adjust my withholding.  But I have side income that I pay self-employment taxes on.  With a 6-figure income I'm really not stressed out about whether I pay $1,000 or receive $1,000 at year's end.
It means you can get to the Wells Fargo money a lot easier if needed. While it's clearly not paying much more than the zero the feds pay on over withheld money, you can access it at will, so that's worth something, imo. It was not a criticism, just an observation. Hope this helps.

Agree with the above and also you can take and move the money at WF to another account that pays better interest whenever you want.... Try doing that with the interest free loan to the government.

Slee_stack

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Re: Badass Tax Refund!
« Reply #32 on: March 17, 2017, 09:58:37 AM »
Congrats on your 401k OP!


This is my third year owing taxes.  I've run $1k owed the last two years and $600 owed the year prior.

 I target zero, but don't put in the effort needed to actually hit it.  I have too much fluctuation on income to make it worth taking the time.  I take a best effort guess at withholding and see where the chips fall.

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Re: Badass Tax Refund!
« Reply #33 on: March 18, 2017, 11:11:05 AM »
THe most badass refund would be <$1

Wouldn't it be to owe $1000, because it's penalty free at that amount and the government basically gave you an interest free loan?

I think so: note, you are allowed to owe more than $1000 as long as the tax owed it less than 10% of your total tax owed for the year, as I read the regs.

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Re: Badass Tax Refund!
« Reply #34 on: March 18, 2017, 05:29:35 PM »
Question for Canadians:  If you plan on contributing $x to your RRSP, can you get your employer to adjust tax withholding so you don't end up with a huge refund at tax time?  For 2016 I made a fairly significant contribution to rrsp's and I'm getting just over $2000 back.  I plan on contributing more in 2017.

plainjane

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Re: Badass Tax Refund!
« Reply #35 on: March 18, 2017, 06:26:43 PM »
Question for Canadians:  If you plan on contributing $x to your RRSP, can you get your employer to adjust tax withholding so you don't end up with a huge refund at tax time?  For 2016 I made a fairly significant contribution to rrsp's and I'm getting just over $2000 back.  I plan on contributing more in 2017.

Yes, it's usually HR who has the forms.

I messed up on my RRSP contributions this year, and the SO thinks I'll be carrying over 2k of room to next year (I think I'm confused with how my company's matching scheme impacts my contributions and need to look at what I was using as my assumptions).  I did better with them - we're only carrying over $400 unused space.
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runewell

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Re: Badass Tax Refund!
« Reply #36 on: March 18, 2017, 11:18:18 PM »
THe most badass refund would be <$1

Actually it wouldn't because the time and effort you spent trying to achieve that would likely outweigh any benefit you actually gain.