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The Money Mustache Community
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Learning, Sharing, and Teaching
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Taxes
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Tax Return & 401k
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Topic: Tax Return & 401k (Read 868 times)
GhostRider103
5 O'Clock Shadow
Posts: 6
Tax Return & 401k
«
on:
November 09, 2018, 08:41:39 PM »
I did not contribute to a 401k in 2017. I contributed to a 401k in 2018.
Will contributing to a 401k lower the amount I get back on tax returns?
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secondcor521
Walrus Stache
Posts: 5503
Age: 54
Location: Boise, Idaho
Big cattle, no hat.
Re: Tax Return & 401k
«
Reply #1 on:
November 09, 2018, 10:18:44 PM »
Generally speaking, no.
Generally speaking, contributing to a 401(k) will decrease your net paycheck (the amount deposited into your bank) and
increase
the amount of your income tax refunds.
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MDM
Senior Mustachian
Posts: 11477
Re: Tax Return & 401k
«
Reply #2 on:
November 09, 2018, 10:49:52 PM »
Quote from: GhostRider103 on November 09, 2018, 08:41:39 PM
Will contributing to a 401k lower the amount I get back on tax returns?
It depends on how your withholding (determined by your W-4 entries) compares with your actual tax due (determined by your form 1040).
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RWD
Walrus Stache
Posts: 6530
Location: Arizona
Re: Tax Return & 401k
«
Reply #3 on:
November 10, 2018, 06:22:34 AM »
Contributing to a 401k will decrease your tax obligation by reducing your taxable income (I am assuming this is not a Roth 401k). Your tax refund is just getting back the money you over-withheld during the year (see MDM's post) and not really related to your 401k contributions.
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Tax Return & 401k