Author Topic: Tax Refund Sale!  (Read 9142 times)

sheepstache

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Tax Refund Sale!
« on: February 11, 2013, 06:01:11 PM »
Tax Refund Sale!

So sayeth a big banner on the furniture store near my place.

I prefer not to provide interest-free loans to the government so I set myself up to not receive a refund.  While this comes down to personal taste, I assume at least some mustachians are with me (and all of you at least understand enough about taxes to know whether you're setting yourself up for a refund and how to change it).  So while this is not super anti-mustachianism, it is still an attitude that annoys me.  Ooh, look, I'm getting some money, better blow it all!  Even if you legitimately need furniture anyway, you should have the money year-round because you're saving enough, not because the government has forced you to save.

And don't get me started on the outfits that give you a loan on your tax refund.  Or all the places that do your taxes "free" if you don't count fees they deduct from the refund because people essentially don't understand what the money is.

AccidentalMiser

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Re: Tax Refund Sale!
« Reply #1 on: February 11, 2013, 06:51:19 PM »
I'm with you!  I was irritated with myself for getting a $78 dollar refund this year.  That extra load of clothes to the thrift store pushed me back positive after all my hard work and planning!

Well, there's always next year!

Jamesqf

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Re: Tax Refund Sale!
« Reply #2 on: February 11, 2013, 07:55:10 PM »
In my case, any "refund" just gets applied to this year's estimated tax.  Given the variable nature of my income & deductions, I would rather give them a bit of an interest-free loan than get hit with a penalty for underpayment of estimated tax.

strider3700

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Re: Tax Refund Sale!
« Reply #3 on: February 11, 2013, 10:26:57 PM »
I always get hit with a "big" you owe us X amount letter after I complete mine.  That money is sitting there having made interest all year   and I pay right away penalty free so I have no problem with that.

sherr

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Re: Tax Refund Sale!
« Reply #4 on: February 12, 2013, 06:50:30 AM »
Hmm, this thread had me curious so I looked it up. Apparently the IRS usually will not charge an underpayment of estimated tax fee as long as you owe less than $1000 at the end of the year. Good to know. http://www.irs.gov/taxtopics/tc306.html

However I'm still wondering how you can be frustrated over a $78 refund? I guess if you have very little variable income and either take the standard deduction or can estimate your deductions very precisely it might be possible to calculate it closer then than. That is a level of financial wizardry that I have not yet attained.

madgeylou

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Re: Tax Refund Sale!
« Reply #5 on: February 12, 2013, 09:31:59 AM »
oh man, the tax places in my neighborhood -- a decidedly low income/ghetto-type place -- are out in full force. i never understood why there'd be, like, 4 tax franchises mixed in with the rent-a-centers and nail salons, but i guess most people in the neighborhood are getting refunds and/or loans against those refunds.

one place hires a guy to stand outside all day in a statue of liberty costume and a sandwich board. it's kind of hilarious.

Jamesqf

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Re: Tax Refund Sale!
« Reply #6 on: February 12, 2013, 12:05:25 PM »
And some people wonder why there's a decline in upward mobility in this country :-)

oh man, the tax places in my neighborhood -- a decidedly low income/ghetto-type place -- are out in full force. i never understood why there'd be, like, 4 tax franchises mixed in with the rent-a-centers and nail salons...

And there's another thing: when your only income is wages from a job, and you don't really have deductions or anything except claiming EIC, why the heck do you need someone to do your 1040-EZ for you?  I still do my own (from principle), even though I've got to do about 8 pages of other forms.
« Last Edit: February 12, 2013, 08:37:10 PM by Jamesqf »

destron

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Re: Tax Refund Sale!
« Reply #7 on: February 12, 2013, 12:09:53 PM »
I plan on spending every last dime of my tax refund as soon as I get it on low cost index funds. I'm such a spendthrift.

Of course, my refund won't be too much since I try and not withhold more than I need to.

mpbaker22

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Re: Tax Refund Sale!
« Reply #8 on: February 12, 2013, 01:18:08 PM »
I am really curious to see my refund.  2012 was my first year working in a full-time, big boy job.  I started the first Friday of January, so I have what essentially amounts to a full years pay.  I just went with what my employer automatically withheld, so I'm sure I'll get a refund, then I'll adjust for 2013.  It'll be nice to get an automatic net worth increase of a few thousand even if it was a 0 interest loan.  My company also does bonuses around the same time, so I should have a savings rate well over 50% in Q1.

the fixer

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Re: Tax Refund Sale!
« Reply #9 on: February 13, 2013, 04:16:48 PM »
I get annoyed by those commercials for I think H&R Block that will do your 1040EZ for free. A 1040EZ would take me at most 10 minutes to do if I qualified to use it, so it's silly that people would actually go to have someone else do it for them. I suspect it's really a ploy to get you in the door so they can tell you that you can't use the EZ for some reason or other, then they can charge you full price. It's disingenuous to tell people "we'll do your taxes for free!" when it's really "come in and we'll assess your tax situation, then if you're really lucky and simple we'll do it free"

D-T

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Re: Tax Refund Sale!
« Reply #10 on: February 13, 2013, 10:27:43 PM »


one place hires a guy to stand outside all day in a statue of liberty costume and a sandwich board. it's kind of hilarious.

Liberty Tax. Yes, all the locations near me do it too.  Poor young guy or lady dancing in the freezing temps.

I'm just thankful those rapid refund loans have pretty much mostly died.

nofool

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Re: Tax Refund Sale!
« Reply #11 on: February 14, 2013, 12:04:57 PM »
Sorry for the thread crap, but I gotta say, you guys make filing taxes sound so easy. My family has always had an accountant do it for us. This is the first year I'm not claimed as a dependent, so I'm trying to learn how to do it myself, and I feel overwhelmed! My taxes are probably really straightforward, but I don't know where to start. Can you guys point me to a good resource where I can learn about this process?

COguy

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Re: Tax Refund Sale!
« Reply #12 on: February 14, 2013, 01:10:37 PM »
I taught myself by just reading the 1040 instructions.  The first year it was easy as I made like $10,000 and it has gotten progressively harder as I have added dividends and capital gains to the mix.  But, still not that hard.  If you mostly only have wage income it should be fairly easy.  Take the time to read the documentation for each line to see if you qualify and just work at it.  Don't be scared if you are doing a 1040 or 1040EZ and you have good reasoning skills it should be  snap.

I am sure there is a good source on the internet as well.  Even if the first time takes you 10+ hours (I doubt it will) think of it as an investment in knowing you don't really have to pay a professional to do it for you.

MrSaturday

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Re: Tax Refund Sale!
« Reply #13 on: February 14, 2013, 01:54:11 PM »
Sorry for the thread crap, but I gotta say, you guys make filing taxes sound so easy. My family has always had an accountant do it for us. This is the first year I'm not claimed as a dependent, so I'm trying to learn how to do it myself, and I feel overwhelmed! My taxes are probably really straightforward, but I don't know where to start. Can you guys point me to a good resource where I can learn about this process?

I've always used tax software.  They hold your hand through the entire process and make it really difficult to screw anything up.

TLV

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Re: Tax Refund Sale!
« Reply #14 on: February 14, 2013, 02:06:31 PM »
Quote
This is the first year I'm not claimed as a dependent, so I'm trying to learn how to do it myself, and I feel overwhelmed! My taxes are probably really straightforward, but I don't know where to start. Can you guys point me to a good resource where I can learn about this process?

If you qualify, I would use free tax filing software (see here) the first time. Once the tax software has done it's thing, it should have any option to print out the actual tax forms that it created. Print those out along with the instructions, then read through the instructions and follow along on the already-filled-in forms

mlipps

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Re: Tax Refund Sale!
« Reply #15 on: February 14, 2013, 02:35:53 PM »
And some people wonder why there's a decline in upward mobility in this country :-)

oh man, the tax places in my neighborhood -- a decidedly low income/ghetto-type place -- are out in full force. i never understood why there'd be, like, 4 tax franchises mixed in with the rent-a-centers and nail salons...

And there's another thing: when your only income is wages from a job, and you don't really have deductions or anything except claiming EIC, why the heck do you need someone to do your 1040-EZ for you?  I still do my own (from principle), even though I've got to do about 8 pages of other forms.

Or the fact that the VITA tax centers will do them for free for low income folks. I volunteer & do this. Two things I think you guys are forgetting though:

1. Lots of people, even super edcuated ones, find their taxes intimidating. Everyone in my office has been talking about using TurboTax or something similar to do theirs. I tried explaining refundable vs. non refundable credits to a coworker the other day and she had trouble understanding it.
2. Low income folks get sizeable refunds due to the EITC, which is refundable. At our VITA center, I see people get $3k refunds regularly, some as high as $6k when there's EITC, refundable additional child tax credit, and American Opportunity Credit rolled into one. Couple that with people not knowing how to fill out the (legitimately awful, at least for married folks) W-4 form, and it's easy to see how people get big refunds. Plus a lot of people think the W-4 is something that has to be done accurately, instead of understanding it's a tool for estimating.

Richard3

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Re: Tax Refund Sale!
« Reply #16 on: February 14, 2013, 03:06:47 PM »
I will actually owe money to the government this year. It's mildly unpleasant / annoying, but it's my own fault for not giving as much money to charity this year.

On the bright side, that's my last tax return (and more importantly my last income tax bill) for a couple years probably.

nofool

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Re: Tax Refund Sale!
« Reply #17 on: February 14, 2013, 05:23:15 PM »
Since I was a full time student with multiple jobs for half the year and then started a full time job in October, I have 4 different W2's for 2012, all with different withholdings...plus I took some pretty substantial capital gains this year (since I'm in the 15% tax bracket, so there would be no cap gains tax), and I don't know how to include that either...ugh.

Jamesqf

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Re: Tax Refund Sale!
« Reply #18 on: February 14, 2013, 06:33:58 PM »
Since I was a full time student with multiple jobs for half the year and then started a full time job in October, I have 4 different W2's for 2012, all with different withholdings...plus I took some pretty substantial capital gains this year (since I'm in the 15% tax bracket, so there would be no cap gains tax), and I don't know how to include that either...ugh.

For the W2s, just add up the numbers - total income, total tax withheld - and enter in the appropriate lines on the 1040.  For the capital gains, your brokerage/mutual fund company should have sent you Form 1099 with the info.  Enter it in Schedule D, and the total on the 1040.  And don't sweat it: if you get it wrong, the IRS will just send you a note pointing out the error, and either saying they want a bit more, or a check for the overage.
« Last Edit: February 15, 2013, 12:11:10 AM by Jamesqf »

Nords

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Re: Tax Refund Sale!
« Reply #19 on: February 14, 2013, 07:05:39 PM »
Sorry for the thread crap, but I gotta say, you guys make filing taxes sound so easy. My family has always had an accountant do it for us. This is the first year I'm not claimed as a dependent, so I'm trying to learn how to do it myself, and I feel overwhelmed! My taxes are probably really straightforward, but I don't know where to start. Can you guys point me to a good resource where I can learn about this process?
TurboTax.  I started our daughter off with it at age 14 when she got her first job.

You're probably able to buy the cheapest, simplest version.  Use the Help menus on the interview questions, and keep clicking on the "Explain this" or "Learn more" links.  The first time will take you a lot longer than you expect, so set yourself up for a half-dozen workouts of about 20-30 minutes.  You can enter "Flag this" reminder notes on each screen where you have questions, so you'll be able to keep track of where you are and what needs more work.  By the time you're working on your 2014 tax return, you'll be an expert on your own tax situation-- an inch wide but a mile deep.  The benefit of that is being able to make the small daily/monthly decisions that'll help you save on your taxes all year long.

nofool

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Re: Tax Refund Sale!
« Reply #20 on: February 15, 2013, 10:27:17 AM »
Cheers, you guys! Thanks for being so helpful! So it seems I need to fill out a 1040, and I should probably do this online. So what happens to the W2's that were sent to me? I don't need to send them in or anything?

mlipps

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Re: Tax Refund Sale!
« Reply #21 on: February 15, 2013, 02:57:25 PM »
Cheers, you guys! Thanks for being so helpful! So it seems I need to fill out a 1040, and I should probably do this online. So what happens to the W2's that were sent to me? I don't need to send them in or anything?

I mean this in the absolute nicest way possible, but at a certain point in life, you have to learn to figure some basic things out on your own. At least TRY before asking for help.

Nudelkopf

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Re: Tax Refund Sale!
« Reply #22 on: February 15, 2013, 03:15:34 PM »
Whoops.. I spent my tax refund on this very tablet that I'm using to write this :-$  This was 1.5yrs ago though, so I hope you forgive me.

I do my tax using the free online program the Australian government supplies. Super easy for me :-)

Jamesqf

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Re: Tax Refund Sale!
« Reply #23 on: February 15, 2013, 03:49:15 PM »
I do my tax using the free online program the Australian government supplies. Super easy for me :-)

Switzerland did the same thing (free Java program) when I lived there.  Even provided a version in English.  And the thing was only about 6 screens long, vs the IIRC 17 pages I sent to the IRS that year.

nofool

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Re: Tax Refund Sale!
« Reply #24 on: February 15, 2013, 04:08:42 PM »
Cheers, you guys! Thanks for being so helpful! So it seems I need to fill out a 1040, and I should probably do this online. So what happens to the W2's that were sent to me? I don't need to send them in or anything?

I mean this in the absolute nicest way possible, but at a certain point in life, you have to learn to figure some basic things out on your own. At least TRY before asking for help.

Well, I appreciate the sentiment, but this one little area of my life that is new to me definitely does not dictate how I live my life in other, larger, more important areas ;)

chucklesmcgee

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Re: Tax Refund Sale!
« Reply #25 on: February 17, 2013, 12:14:40 PM »
In my case, any "refund" just gets applied to this year's estimated tax.  Given the variable nature of my income & deductions, I would rather give them a bit of an interest-free loan than get hit with a penalty for underpayment of estimated tax.

The penalty they assess is hardly above inflation. You'd probably do better investing that money instead of making estimated payments.

Jamesqf

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Re: Tax Refund Sale!
« Reply #26 on: February 17, 2013, 01:06:03 PM »
The penalty they assess is hardly above inflation. You'd probably do better investing that money instead of making estimated payments.

Depends.  I don't claim to really understand it, but my perception is that they can assess the penalty on the amount due for the whole year (spread over quarters), even if I earned the extra money in December.  (Which was in fact true this year: I had little income in the April-October period, but a couple of really big payments in November & December.) 

But the worse part is that it would get me into the complexity & frustration of dealing with the IRS, which is worth foregoing a bit of interest to avoid.  Plus there's always the suspicion that "the nail that sticks up gets hammered down" - that is, that an estimated tax penalty would flag my return for an audit.

AccidentalMiser

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Re: Tax Refund Sale!
« Reply #27 on: February 20, 2013, 02:07:11 PM »
@nofool:

I use taxact.com to do my taxes.  I first do them by hand using the 1040/1040A books and forms from the library.

I would recommend getting a 1040 book and a few forms from the library and fill it out.  The instructions are tedious but mostly comprehensive and it should take you two or three hours to get the form filled out (use a pencil.)

Once you've completed that little exercise, get yourself a tax program or use one of the online services and input your stuff and see if it all agrees.  If so, pat yourself on the back.  If not, go through the figures in the program and on your forms to see where the differences are and why they are different.  Once all that is straight, you can submit your taxes on line and have your refund (if any) direct deposited.

Doing them by hand for a few years will help you understand how all the numbers work together and give you the confidence to know how life decisions will impact your tax picture.  It really has helped me in this way. 

Good luck!

nofool

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Re: Tax Refund Sale!
« Reply #28 on: February 20, 2013, 03:36:25 PM »
I like that idea, Accidental Miser! Thank you :) I'm just waiting on my last 1099 Div form so I can get started!