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Make money by having too much state income tax withheld
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Topic: Make money by having too much state income tax withheld (Read 4507 times)
Cathy
Handlebar Stache
Posts: 1044
Make money by having too much state income tax withheld
«
on:
December 20, 2014, 05:27:20 PM »
[
This post discussed the possibility of reducing one's federal tax liability through clever use of state tax prepayment. I decided to delete the post because the information was not as carefully written as my more recent posts and I wouldn't want it to mislead somebody.
]
«
Last Edit: November 24, 2015, 01:35:26 AM by Cathy
»
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MooseOutFront
Pencil Stache
Posts: 506
Age: 44
Location: Texas
Re: Make money by having too much state income tax withheld
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Reply #1 on:
December 20, 2014, 05:36:22 PM »
I like it. You could lock in a guaranteed rate of return by applying the money to mortgage principal. Assuming of course you'll have cash to write a check with in 15-16 months when you pay it back.
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ClaycordJCA
Stubble
Posts: 109
Location: SF Bay Area
Re: Make money by having too much state income tax withheld
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Reply #2 on:
December 20, 2014, 05:56:55 PM »
Doesn't one risk being subject to quarterly tax payments in subsequent years because of being under withheld?
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RWD
Walrus Stache
Posts: 6597
Location: Arizona
Re: Make money by having too much state income tax withheld
«
Reply #3 on:
December 20, 2014, 06:20:43 PM »
Quote from: Cathy on December 20, 2014, 05:27:20 PM
So let's imagine you have $10,000 extra withheld in the final paycheck of 2014 for state income tax.
Your paychecks must be a lot bigger than mine if you've got a spare $10k that you could withhold...
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Undecided
Handlebar Stache
Posts: 1237
Re: Make money by having too much state income tax withheld
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Reply #4 on:
December 20, 2014, 06:49:29 PM »
Regularly, I don't think it's worth it for me, but I've planned to do it for my last year of working, taking the deduction at 35% and then paying 0% on the refund.
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mqtxc
5 O'Clock Shadow
Posts: 5
Re: Make money by having too much state income tax withheld
«
Reply #5 on:
December 20, 2014, 07:17:52 PM »
If you use your income taxes paid to a state as an itemized deduction on your federal return, your state refund for that year will be taxable income on your federal return the following year. It's reported as income on line 10 of the 1040.
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TerriM
Pencil Stache
Posts: 505
Re: Make money by having too much state income tax withheld
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Reply #6 on:
December 20, 2014, 07:24:10 PM »
Just don't do this when CA is issuing IOUs.
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Bob W
Magnum Stache
Posts: 2942
Age: 65
Location: Missouri
Live on minimum wage, earn on maximum
Re: Make money by having too much state income tax withheld
«
Reply #7 on:
December 21, 2014, 09:09:21 PM »
http://rootofgood.com/make-six-figure-income-pay-no-tax/
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Make money by having too much state income tax withheld