Author Topic: Would you rather owe or get a refund?  (Read 16897 times)

Larabeth

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Would you rather owe or get a refund?
« on: February 12, 2016, 02:21:18 AM »
My dad pointed out to me that he would rather be able to use the money throughout the year and pay the government back than to essentially lend the government a portion of his check with no interest.

I personally get stuck with a refund every year, even though I've claimed all the exemptions I can.

Frankies Girl

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Re: Would you rather owe or get a refund?
« Reply #1 on: February 12, 2016, 03:58:33 AM »
Rather owe. Try to break even, but in the past, it was usually me paying around $300 to the IRS. I'd say that was pretty decent.

Due to some wonky work history and being on the ACA, I got a large refund this year. So mad about that, but nothing I could do really as I had no idea how things would shake out regarding salary and taxes and the ACA subsidy stuff. I know going forward now, so hoping to get it much closer to zero or even owing for next year (but may take another year to work out the kinks).

Hate when I get a refund because I feel I am giving them an interest free loan of my hard earned money. I have never understood the mentality of people that are thrilled with large refunds; it's not free money that just fell from the sky. Sigh.

Larabeth

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Re: Would you rather owe or get a refund?
« Reply #2 on: February 12, 2016, 05:41:40 AM »
Right?! At least my refund was close to break even this year, but I would have been more proud if I had been paying

Paul der Krake

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Re: Would you rather owe or get a refund?
« Reply #3 on: February 12, 2016, 05:58:40 AM »
Owe. I would pay my entire federal tax liability on April 14th if I could get away with it.

MDM

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Re: Would you rather owe or get a refund?
« Reply #4 on: February 12, 2016, 06:12:33 AM »
...even though I've claimed all the exemptions I can.

You may claim as many allowances on your W-4 as you want - there is no limit.

To avoid penalties, your tax due in April must fit into one of three "safe harbors" (a fourth is "the first time you ever file a return").  The safe harbors are that you withhold enough so in April you
1) Owe less than $1000, or
2) Owe less than 10% of your total tax due for the year, or
3) Withheld at least as much as your total tax due for the previous year (110% of last year's total tax due if last year's AGI was $150K or more)

See https://www.irs.gov/Individuals/Understanding-Your-CP30-Notice for the IRS language version.

teen persuasion

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Re: Would you rather owe or get a refund?
« Reply #5 on: February 12, 2016, 06:25:04 AM »
For me, it depends on how you look at it.  Most of my refund is refundable credits - there's no way to get those until filing, so if I suddenly owed it would mean either I'd lost all the credits or I owed enough to use up the credits.  In that case, I'd rather get the refund.  Now, if we are talking about a change in the system so that I could manipulate things, yes I would prefer to get advance credits throughout the year and owe a tiny bit at filing.

Of course, one other way to look at it is this: if I suddenly owed, we must have increased our income enough to use up all the credits.  That increase in income would definitely be preferable.

I'm a red panda

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Re: Would you rather owe or get a refund?
« Reply #6 on: February 12, 2016, 06:27:53 AM »
Owe a small amount.

But if we owe a large amount, it's not that big of a deal.  I feel dumb when I get a large amount back.

horsepoor

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Re: Would you rather owe or get a refund?
« Reply #7 on: February 12, 2016, 07:15:58 AM »
Rather owe. Try to break even, but in the past, it was usually me paying around $300 to the IRS. I'd say that was pretty decent.

Due to some wonky work history and being on the ACA, I got a large refund this year. So mad about that, but nothing I could do really as I had no idea how things would shake out regarding salary and taxes and the ACA subsidy stuff. I know going forward now, so hoping to get it much closer to zero or even owing for next year (but may take another year to work out the kinks).

Hate when I get a refund because I feel I am giving them an interest free loan of my hard earned money. I have never understood the mentality of people that are thrilled with large refunds; it's not free money that just fell from the sky. Sigh.

I realize it's stupid, but I like getting a refund because we allocate it towards home projects.  This year and last we owed federal and got about the same amount back from state.  So now we're doing the more logical thing and putting cash into a home improvement  fund monthly.  It just negated the need for spousal negotiations on home improvement spending.

NumberCruncher

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Re: Would you rather owe or get a refund?
« Reply #8 on: February 12, 2016, 07:39:26 AM »
I'd rather receive a small refund (~$100 or something), just because I hate owing money.

Ideal would be a perfect wash - the perfect amount of tax taken out every month, just like basically all my other bills that are automated.

Altons Bobs

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Re: Would you rather owe or get a refund?
« Reply #9 on: February 12, 2016, 10:52:08 AM »
I would rather owe them money at tax time.  We have never ever got a refund check from IRS.

johnny847

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Re: Would you rather owe or get a refund?
« Reply #10 on: February 12, 2016, 11:00:21 AM »
Ideally owe as much as possible without incurring penalties. Of course with investment income it's hard to get it exactly right. But I do my best to set it up to owe some amount every year.

nereo

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Re: Would you rather owe or get a refund?
« Reply #11 on: February 12, 2016, 11:01:52 AM »
Owe. I would pay my entire federal tax liability on April 14th if I could get away with it.
+1.  Our tax bill has never been high due to a combination of low income and large deductions, but I'd rather owe money than know I gave the government an interest free loan over the past year.  To avoid penalties I normally try to owe $300-400, which gives me plenty of headroom if we overshoot.

spud1987

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Re: Would you rather owe or get a refund?
« Reply #12 on: February 12, 2016, 12:06:44 PM »
I'm going to go against MMM conventional wisdom and say that I'd rather get a refund.

I've done both, and I prefer refunds for the following reasons:

(1) an extra slug of cash is easier for me to save compared to that cash being spread out throughout the year. for example, we are getting 10k back this year and it will go directly to vanguard. would we have saved this 10k if it was spread out over 26 paychecks? Hopefully, but I'm not sure.
(2) yes, it is a 0% interest loan to the gov't. but savings accounts are paying 0-.25% interest so the opportunity cost isn't great. this could change if interest rates rise though. the 0% loan is actually going to work in our favor this year since equities are lower now than any point in 2015.
(3) less anxiety regarding the amount we will owe. I hate the feeling of doing my taxes and worrying about how big the bill is going to get. The bill is always variable too since my wife's paycheck is about 33% commission and we itemize deductions.
(4) no penalties. if you have to pay in too much (over 1k and your w2 wages remain flat/fall from the prior year), you may get hit with penalties.

Vertical Mode

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Re: Would you rather owe or get a refund?
« Reply #13 on: February 12, 2016, 12:23:25 PM »
I'm going to go against MMM conventional wisdom and say that I'd rather get a refund.

I've done both, and I prefer refunds for the following reasons:

(1) an extra slug of cash is easier for me to save compared to that cash being spread out throughout the year. for example, we are getting 10k back this year and it will go directly to vanguard. would we have saved this 10k if it was spread out over 26 paychecks? Hopefully, but I'm not sure.
(2) yes, it is a 0% interest loan to the gov't. but savings accounts are paying 0-.25% interest so the opportunity cost isn't great. this could change if interest rates rise though. the 0% loan is actually going to work in our favor this year since equities are lower now than any point in 2015.
(3) less anxiety regarding the amount we will owe. I hate the feeling of doing my taxes and worrying about how big the bill is going to get. The bill is always variable too since my wife's paycheck is about 33% commission and we itemize deductions.
(4) no penalties. if you have to pay in too much (over 1k and your w2 wages remain flat/fall from the prior year), you may get hit with penalties.

Agree, for reasons 1,2, and 4.

I'm content to give the government a small, interest-free loan in exchange for keeping my tax picture super-simple and straightforward. I'll let them keep the interest/opportunity cost of slightly overpaying taxes throughout the year if they agree to keep my effective tax rate in the single digits!

Tabaxus

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Re: Would you rather owe or get a refund?
« Reply #14 on: February 13, 2016, 08:18:59 AM »
I'm going to owe a penalty this year, unfortunately, and of course my investments have fared poorly, but I'm still going to angle toward owing as little as possible rather than getting a refund.  Just wasn't paying attention to my withholdings and they were way too low, ugh.

BlueHouse

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Re: Would you rather owe or get a refund?
« Reply #15 on: February 13, 2016, 08:38:00 AM »
Refund.  I've been doing a piss-poor job of estimating my taxes the past few years due to a number of swings in income and changes right before the end of the year -- when I'm too busy to recalculate my estimate. 
So one year I got a refund of $25K federal and $5K state.  The next year I owed $15K and cash flow at that time of the year is already tight...so I felt in debt (I had to take a personal loan from myself to my business) for 6 months.  Maybe this year I'll get it right, but maybe not.  I haven't cracked the books to see how much income I had last year yet.  I just know it's difficult for me to work my cash flow issues while keeping personal and business accounts separated when I owe a lot. 

One of these days, I'll take the time and plan it out correctly, but that probably won't happen until the contracts are steady throughout the year. 

cats

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Re: Would you rather owe or get a refund?
« Reply #16 on: February 13, 2016, 08:41:04 AM »
Ideally I would owe something like a dollar...that way there's minimal hassle but I also haven't overpaid.

Something of a sidetrack, but for those of you who would rather owe, is there a good (and not too complicated) method of calculating your tax liability?  I wouldn't mind paying everything on April 15th if I had a reasonably accurate projection.

Last year we wound up with a fairly large tax bill.  I adjusted my withholdings to theoretically account better for the fact that I'm married.  Despite that, this year we wound up with an even larger tax bill.  Our income did also go up a LOT so it wasn't exactly a surprise, but it still felt like a LOT of money to have to pony up.

Our 2016 income and deductions are likely to be quite different from 2015 again (having a baby), so it's not like we can just assume "okay, will probably owe about the same amount next year, let's set that aside and be prepared".  Conveniently my company does bonus payouts in March so we can always have a "tax savings" plan of using my bonus to pay the tax bill (so far bonus has exceeded tax by a healthy amount, whew).  And we typically prepare our return in January/February, so it's not like we discover we owe a massive amount of money on April 13 or something.  So getting a huge bill is more of an annoyance than a crisis.  But it would be nice to have it dialed in better.  Taxes give me a headache so I haven't investigated this in as much detail as I probably should....

geekette

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Re: Would you rather owe or get a refund?
« Reply #17 on: February 13, 2016, 08:50:44 AM »
We used to cut it pretty close, but since DH retired, our tax liability is 0.  We pay for our ACA insurance out of pocket with credit cards to get bonuses and frequent flier miles, then claim the refund at the end of the year. 


protostache

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Re: Would you rather owe or get a refund?
« Reply #18 on: February 13, 2016, 09:00:07 AM »
I would rather owe a little. This year we owed ~$500 to the feds and another $500 to the state, which seems like it was pretty good. This year we're going to work with our accountant each quarter to make our estimates match revenue as much as possible, which should result in us owing close to nothing next April.

MDM

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Re: Would you rather owe or get a refund?
« Reply #19 on: February 13, 2016, 09:50:22 AM »
Something of a sidetrack, but for those of you who would rather owe, is there a good (and not too complicated) method of calculating your tax liability?  I wouldn't mind paying everything on April 15th if I had a reasonably accurate projection.
You have just done your 2015 taxes, correct?  Unless you threw everything over the wall to a CPA and received only "here is what you owe" in return, you are all set to estimate 2016 taxes.  "Do" a 2016 return by changing the 2015 entries to what you expect for 2016, and there you go.  It won't be exact (tax brackets, etc., will change), but for practical purposes it will be an estimate as good as the inputs you provide.

If that answer isn't specific enough (and it might not be), just ask about the unclear part(s).

See also http://forum.mrmoneymustache.com/taxes/best-way-to-calculate-w-4-exemptions-for-2016/ and http://forum.mrmoneymustache.com/taxes/am-i-witholding-too-much/ for similar discussions.

lostamonkey

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Re: Would you rather owe or get a refund?
« Reply #20 on: February 13, 2016, 10:06:15 AM »
If the government didn't want instalments, and my employer was okay with it, I would like to pay the government all my taxes including employee CPP and EI on April 30 which is the deadline in Canada.

RedmondStash

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Re: Would you rather owe or get a refund?
« Reply #21 on: February 13, 2016, 03:33:42 PM »
Owe a few hundred. That's not a big hit to our checkbook, so it's easily absorbable. Like others have said here, I prefer to make money off the government's free loan to me than vice versa.

For 2015, we're likely to owe a little too much and pay a penalty, for some unforeseen reasons. Still no big deal. We'll fix that for 2016.

robotclown

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Re: Would you rather owe or get a refund?
« Reply #22 on: March 02, 2016, 09:46:49 PM »
I try for the smallest refund possible without owing anything.  Mostly to avoid the hassle of having to write them a check and mailing it and them inevitably losing it and sending me angry letters.  This year I managed to get a refund of $4. 

Dollar Slice

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Re: Would you rather owe or get a refund?
« Reply #23 on: March 02, 2016, 10:26:52 PM »
In theory, I don't want to loan the IRS money, so I'd want to owe a bit. In practice, I try to get as close to $0 as I can; but if I made a mistake and it's not close to $0, I would rather find out I owe less tax than I expected and get a refund.

Dicey

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Re: Would you rather owe or get a refund?
« Reply #24 on: March 02, 2016, 10:33:03 PM »
In my pre-FIRE days, I worked hard to stay as close to zero as possible. Drove HR crazy, which made me perversely happy. This year, we flipped a house and made good $$ on it. I know we're going to owe a butt-load of taxes, so I plan on filing (and paying) at the very last minute. Yeah, the cash is sitting in the bank, but I'm not too excited about sending it to Uncle Sam...FWP, indeed.

RedmondStash

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Re: Would you rather owe or get a refund?
« Reply #25 on: March 03, 2016, 09:01:13 AM »
A lot of non-Mustachians who'd prefer to get a refund count on the refund as "extra" money, and probably don't have the funds in hand to pay taxes in April. Several of my friends fall into this category, where the refund is a windfall they use to splurge on something instead of saving it or paying down debt. That attitude is pretty pervasive and automatic until you stop to look at it.

nereo

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Re: Would you rather owe or get a refund?
« Reply #26 on: March 03, 2016, 09:06:48 AM »
A lot of non-Mustachians who'd prefer to get a refund count on the refund as "extra" money, and probably don't have the funds in hand to pay taxes in April. Several of my friends fall into this category, where the refund is a windfall they use to splurge on something instead of saving it or paying down debt. That attitude is pretty pervasive and automatic until you stop to look at it.
It certainly is, as is evidenced by all the articles and ad campaigns focusing on where to "splurge or save" your tax refund.
People see it as a 'windfall' instead of 'money they unnecessarily paid throughout the year'

What I find facinating is that we (individuals) collectively overpay our taxes by $125B each year.  That's "billion" with a B.  Almost 40 million households get refunds averaging over $3k.

NoStacheOhio

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Re: Would you rather owe or get a refund?
« Reply #27 on: March 03, 2016, 09:20:10 AM »
Obviously, no refund/no balance is ideal. This year, ours pretty much worked out to be a wash. Owed a little federal and local, got a little back on the state. We recharacterized some Roth contributions to reduce the federal liability, and I'm using the state refund to pay my local balance. This is pretty much best case.

No idea what next year will look like since my wife quit her W-2 job and is back to 1099 work. Once everything settles down, I'll just increase my withholding to try to cover her self-employment and income taxes.

Highbeam

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Re: Would you rather owe or get a refund?
« Reply #28 on: March 03, 2016, 11:50:42 AM »
For the first time in my life I owe and owe a penalty of 19$. I've adjusted my withholdings to assure a small refund next year. I don't want the hassle of sending them a check and depending on the IRS getting it.

The reason for the owe this year is good news, we refinanced and pay very little mortgage interest now. We also paid off two loans that had deductible interest.

To get a slight refund next year I simply took my debt this year and divided it by 12, had my monthly withholdings increased by that much and boom, done. You don't even need to jack around with the #of dependents, you can simply write on your W4 to have X amount of additional money withheld.

StacheInAFlash

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Re: Would you rather owe or get a refund?
« Reply #29 on: March 03, 2016, 11:55:28 AM »
I've gotten better every year at getting it down to break even point, which I feel is obviously the ideal result. This year, it was looking like owing $113...not too shabby. But wait!, in order to flip this the other direction, I started typing in numbers to check what the bare minimum IRA contribution it would take to swap it into my favor. $440 additional contribution, made right then on Vanguard, and voila!, $9 refund. Just about perfect! Money well spent!

cschx

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Re: Would you rather owe or get a refund?
« Reply #30 on: March 03, 2016, 12:41:31 PM »
I guess it's important to keep the whole financial picture in mind. In my case overpaying on my taxes (a little) and getting a refund is optimal, because the refund qualifies as a bona fide direct deposit which can be parlayed into multiple bank account signup bonuses totaling hundreds of dollars. This is super important for me because I front-load my retirement contributions and take a $0 paycheck the first nine months of the year, so it's one of the few ways I can satisfy the bonus requirements. The proceeds far outweigh any interest lost on the overpayment.

http://www.doctorofcredit.com/how-to-split-your-tax-refund-into-multiple-accounts/

Undecided

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Re: Would you rather owe or get a refund?
« Reply #31 on: March 04, 2016, 10:16:27 AM »
Obviously, no refund/no balance is ideal.

Why? In 2015 I had the necessary percentage of my 2014 tax liability withheld (all from my year-end bonus and paychecks in the last quarter of the year), to reach the safe harbor for avoiding penalties. I will owe money next month. I think that's better than if I'd avoided that balance by paying more during 2015.

RedmondStash

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Re: Would you rather owe or get a refund?
« Reply #32 on: March 04, 2016, 06:24:39 PM »
Obviously, no refund/no balance is ideal.

Why? In 2015 I had the necessary percentage of my 2014 tax liability withheld (all from my year-end bonus and paychecks in the last quarter of the year), to reach the safe harbor for avoiding penalties. I will owe money next month. I think that's better than if I'd avoided that balance by paying more during 2015.

Same here. A short-term free loan from the government is worth writing a check once a year.

JetBlast

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Re: Would you rather owe or get a refund?
« Reply #33 on: March 13, 2016, 05:55:26 PM »
Rationally, I'd prefer to owe as much as possible without incurring penalties. Emotionally, I don't like writing the check so I shoot for breakeven. Worked out great this year.  Net refund between federal and state returns of $5.

jexy103

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Re: Would you rather owe or get a refund?
« Reply #34 on: March 14, 2016, 06:05:37 AM »
I would rather see a small refund (<$100) than owe anything. I've never owed before, and I'm not sure how much of a hassle it is. (Do you enter a credit card number into your tax return? Do you have to mail a check? I'm terrible with mailing things- I'll put it off for months.) This year is the first that DH and I are filing married, and I had a month unemployed while he got stationed to a foreign country, and then I got a promotion and he got a pay raise (all at different times of the year), so I wasn't sure what to expect. This year, our refund was almost $2,000, which is WAY too much. However, through H&R Block, we were able to receive our refund in $100 increments on an Amazon gift card and they added a 10% bonus on that amount. So we received a 10% ROI (9.7% ROI if you calculate based on the full refund amount) at the end of the "interest free loan to the IRS." We will use the Amazon gc throughout the year to purchase US goods that we can't acquire locally, which will lower our grocery bills for months to come. Yes, the extra $2K would earn gains and compound over years, but we could do worse than a one-time 10% ROI too... like use our refund as a "down payment" on some shiny thing at Wal-Mart...

Also, we have both adjusted our withholdings so that a $2K refund doesn't happen again- 10% bonus or no. ;-)

ender

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Re: Would you rather owe or get a refund?
« Reply #35 on: March 14, 2016, 06:21:42 AM »
Keep in mind most of us getting any bonus will have 25% (or more) federal withholding on it, so even if you plan your W4 perfectly you might get a refund at the end of the year.

This is more true for end of year bonuses, where you can't exactly adjust your withholdings to "fix" like you could if you had a January bonus paid out. And if you don't know in advance how much your bonus will be... well sign me up for an accidental huge refund :-)

Paul der Krake

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Re: Would you rather owe or get a refund?
« Reply #36 on: March 14, 2016, 07:34:00 AM »
I would rather see a small refund (<$100) than owe anything. I've never owed before, and I'm not sure how much of a hassle it is. (Do you enter a credit card number into your tax return? Do you have to mail a check? I'm terrible with mailing things- I'll put it off for months.)
You can pay by card for a flat percentage fee. Otherwise it's direct deposit or check.

Spitfire

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Re: Would you rather owe or get a refund?
« Reply #37 on: March 22, 2016, 08:09:13 AM »
I'm a CPA and still prefer to get a refund (shame on me right?!). It's never much though because of cap gains, dividends, and being single with no deductions :(

slugline

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Re: Would you rather owe or get a refund?
« Reply #38 on: March 23, 2016, 10:26:06 AM »
To me there are really three outcomes --

Given the choice between a big refund (> $1000) and a big tax bill (> $1000) I would take the big refund. At least I pay no penalty and it's simply easier not needing to set aside money for that contingency.

All outcomes with smaller refunds or smaller tax bills look the same to me in the big picture view.

johnny847

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Re: Would you rather owe or get a refund?
« Reply #39 on: March 23, 2016, 10:54:20 AM »
To me there are really three outcomes --

Given the choice between a big refund (> $1000) and a big tax bill (> $1000) I would take the big refund. At least I pay no penalty and it's simply easier not needing to set aside money for that contingency.

All outcomes with smaller refunds or smaller tax bills look the same to me in the big picture view.

Having a tax bill of more than $1000 doesn't mean you owe any penalties. Owing less than $1000 is a sufficient but not necessary condition to avoid penalties.

You can owe a ton of money and still owe nothing in penalties if any of the following apply:
  • You withheld/made payments of at least 100% of last year's tax liability (110% if your AGI last year was at least $150k). This one involves no guesswork on your part during the year about how much you should withhold/pay
  • The amount owed is less than 10% of your total tax liability for this year, and you made your estimated tax payment on time

And two other methods that aren't worth mentioning here.

galliver

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Re: Would you rather owe or get a refund?
« Reply #40 on: March 23, 2016, 12:07:26 PM »
I'd rather get a small refund for entirely psychological reasons. And I'm talking maybe $100-200 at most. Preferably less. Unless credits are involved as someone upthread mentioned (but I've never been in that situation).
1) Doing taxes is a hassle and getting a small amount at the end is a pleasant way to wrap it up. Even if it's $5.
2) It's silly, but I find paying from my bank account a hassle; objectively, it's not a big deal, but it's annoying how much more effort it takes than other forms of payment (my bank acct number and checkbook are less accessible than my credit/debit cards). But I can't stomach paying the $2-3 flat fee for using a card on a $6 tax bill (which is what mine was this year). Not to mention mailing a check in previous years. That was even more irritating.
2a) Not applicable to a $6 bill, but with sums on the order of hundreds it's necessary to make sure they're in the correct checking account not earmarked for anything. Again, not world-ending, but an irritation. It messes with the fluidity of my money management. It's an interruption.
3) Kinda sucks to be the person finding out you have slightly less than you thought when everyone else is finding out they have slightly more. Then again, aiming to owe 300 and finding out I owed 200 would give the same positive feeling; it's just when you aim for zero, owing anything is more than expected. (IMO this is definitely not enough of an issue to do taxes multiple times per year, though, just to have adequately-adjusted expectations.)

I don't judge too harshly those who use tax refunds as a savings vehicle/motivator, because while I don't hold them up as shining examples of self-discipline, I applaud their self-awareness to work around their limitations. Treating it like free money is a different story, of course.

Gin1984

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Re: Would you rather owe or get a refund?
« Reply #41 on: March 23, 2016, 12:18:20 PM »
A lot of non-Mustachians who'd prefer to get a refund count on the refund as "extra" money, and probably don't have the funds in hand to pay taxes in April. Several of my friends fall into this category, where the refund is a windfall they use to splurge on something instead of saving it or paying down debt. That attitude is pretty pervasive and automatic until you stop to look at it.
It certainly is, as is evidenced by all the articles and ad campaigns focusing on where to "splurge or save" your tax refund.
People see it as a 'windfall' instead of 'money they unnecessarily paid throughout the year'

What I find facinating is that we (individuals) collectively overpay our taxes by $125B each year.  That's "billion" with a B.  Almost 40 million households get refunds averaging over $3k.
Some people don't have a choice.  EITC used to be able to be given during the year, that is gone.  Child credit is $1000 refundable.  Combine the two with low income and you could pay nothing and still get back.

RWD

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Re: Would you rather owe or get a refund?
« Reply #42 on: March 23, 2016, 01:25:39 PM »
I deliberately over withhold so that I don't have to worry about taxes on dividends or other investments that don't get factored into our W-4.

Paul der Krake

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Re: Would you rather owe or get a refund?
« Reply #43 on: March 23, 2016, 04:19:05 PM »
I deliberately over withhold so that I don't have to worry about taxes on dividends or other investments that don't get factored into our W-4.
Must be nice.

Just kidding. I dread the day where I will be leaving the 15% bracket and will have to start worrying about withholding on investment returns.

RWD

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Re: Would you rather owe or get a refund?
« Reply #44 on: March 23, 2016, 05:44:29 PM »
I deliberately over withhold so that I don't have to worry about taxes on dividends or other investments that don't get factored into our W-4.
Must be nice.

Just kidding. I dread the day where I will be leaving the 15% bracket and will have to start worrying about withholding on investment returns.
So far it's not making too much difference. We ended up getting about $4k back this year. There was also some uncertainty on whether we would have to repay the remaining balance on our first time homebuyer credit after moving which is another reason I didn't try to reduce our withholding for 2015. If that hadn't been waived we would have owed money instead of received a refund.

There was one year where we made quarterly estimated tax payments. That was a pain.

iris lily

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Re: Would you rather owe or get a refund?
« Reply #45 on: March 23, 2016, 05:57:38 PM »
I would rather owe. While the interest earned on what
I owe s mniscule these days, I theoretically d not want t give Nanny G more of my money until I have to give t up.

This year we had a refund for the first time in decades because we FIRED and our incme stream is ever changng.

Snce we will be playing  ACA roulette next year, we might end up with another IRS refund.

At some point, about three years out, our n me will stabilize and we can better plan so that we get no refunds.

nereo

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Re: Would you rather owe or get a refund?
« Reply #46 on: March 25, 2016, 07:04:48 AM »
well i just finished my taxes, and I got $54 back.  Sigh... looks like I overshot.  the refund was due to unexpected reduced income during the Q4.

FireLane

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Re: Would you rather owe or get a refund?
« Reply #47 on: March 26, 2016, 01:51:36 PM »
I'm going to go against the grain and say I prefer to get a refund.

I know that, financially, it makes no sense to give the government an interest-free loan of my own money. But psychologically, it makes it easier to save. When I get the refund money in a lump sum, it feels more like "extra" money, and since I already made out my budget without the assumption of having that amount, it doesn't hurt to put it into Vanguard. To put it another way, it's like the government is holding onto some of my money to protect me from the temptation of lifestyle inflation!

RedmondStash

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Re: Would you rather owe or get a refund?
« Reply #48 on: March 26, 2016, 05:01:33 PM »
I'm going to go against the grain and say I prefer to get a refund.

I know that, financially, it makes no sense to give the government an interest-free loan of my own money. But psychologically, it makes it easier to save. When I get the refund money in a lump sum, it feels more like "extra" money, and since I already made out my budget without the assumption of having that amount, it doesn't hurt to put it into Vanguard. To put it another way, it's like the government is holding onto some of my money to protect me from the temptation of lifestyle inflation!

Funny how we're all different. :) Human existence and decision-making are much more emotional than rational things.

I don't generally use psychological strategies on myself in finance, but I sure do in other areas of my life.

I figure we all know what works best for us. More power to us for knowing ourselves and how best to approach money for our own tolerances, limitations, and comfort.

Tigerpine

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Re: Would you rather owe or get a refund?
« Reply #49 on: March 26, 2016, 05:28:40 PM »
I suppose ideally I'd like to break exactly even.  Barring that, I 'd rather get a refund, because at least I'd have the peace of mind from knowing that I'm on Uncle Sam's good side.  Also, the place where I work hands out bonuses to peons like me in theory only.  So even though it's completely self-funded, I can at least try to delude myself that I'm getting a bonus once a year. ;)