Comments on: Taxes - Which is Better: Large Refund, or Owe the IRS? http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/ Your Money. Your Career. Your Life. Fri, 25 Jul 2008 01:42:29 +0000 http://wordpress.org/?v=abc By: What’s Your Financial IQ? Here’s A Test | Moolanomy http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-8913 What’s Your Financial IQ? Here’s A Test | Moolanomy Wed, 28 May 2008 12:02:33 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-8913 [...] You know that too much tax withholding is the same as giving the governments interest-free loans. [...] [...] You know that too much tax withholding is the same as giving the governments interest-free loans. [...]

]]> By: Money Hackers Carnival #9 - Scream Edition! http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7412 Money Hackers Carnival #9 - Scream Edition! Wed, 23 Apr 2008 02:11:24 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7412 [...] Cash Money Life wants to know if it’s better to get a tax refund or owe money? [...] [...] Cash Money Life wants to know if it’s better to get a tax refund or owe money? [...]

]]> By: Prime Time Money: Anniversary Roundup | Prime Time Money http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7342 Prime Time Money: Anniversary Roundup | Prime Time Money Mon, 21 Apr 2008 04:07:59 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7342 [...] from Cash Money Life debates whether a bigger refund is better than having to pay during tax [...] [...] from Cash Money Life debates whether a bigger refund is better than having to pay during tax [...]

]]> By: Hustle Strategy http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7298 Hustle Strategy Sat, 19 Apr 2008 01:21:43 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7298 Good topic. Most frugal people would rather it be close or owe. I like getting lump sums towards the end of the year. Some advice, get married in December, have kids in December, donate, run big mortgages, etc... Having a kid January 1st has to be rough... Good topic. Most frugal people would rather it be close or owe. I like getting lump sums towards the end of the year. Some advice, get married in December, have kids in December, donate, run big mortgages, etc… Having a kid January 1st has to be rough…

]]> By: Prosper Roundup — Spring is Nearly Here Addition http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7296 Prosper Roundup — Spring is Nearly Here Addition Fri, 18 Apr 2008 22:39:05 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7296 [...] Cash Money Life asks Taxes - Which is Better: Large Refund, or Owe the IRS? [...] [...] Cash Money Life asks Taxes - Which is Better: Large Refund, or Owe the IRS? [...]

]]> By: Frugal Babe http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7225 Frugal Babe Wed, 16 Apr 2008 22:31:56 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7225 We've had it both ways. Two years ago, we owed 6 grand at tax time, and this year we got a $3800 refund. Our tax situation changes all the time, because we own our own business and our income fluctuates quite a bit. Obviously I don't like seeing such a big refund, because we could have used that money throughout 2007. But I prefered it to the shock we got the year we found out we owed $6000. Overall, I'd rather just be close (last year we owed the state about $150, and got about $300 back from the IRS). I'm making some adjustments now to try to be a bit more on track for our 2008 taxes. We’ve had it both ways. Two years ago, we owed 6 grand at tax time, and this year we got a $3800 refund. Our tax situation changes all the time, because we own our own business and our income fluctuates quite a bit. Obviously I don’t like seeing such a big refund, because we could have used that money throughout 2007. But I prefered it to the shock we got the year we found out we owed $6000. Overall, I’d rather just be close (last year we owed the state about $150, and got about $300 back from the IRS). I’m making some adjustments now to try to be a bit more on track for our 2008 taxes.

]]> By: Kirk http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7221 Kirk Wed, 16 Apr 2008 19:55:07 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7221 It hurts to owe a few thousand to the IRS in April, but every positive financial move should hurt a little. Isn't it more pleasurable to spend money than save it. However, saving builds your wealth and so does owing the IRS. One caveat though: if you spend the money that would otherwise go to the guv during the year then it may not be smart. But, if you leverage it by capturing yield during the year and holding off on paying the government until April, it starts to add up. It creates cash flow even if it is only a couple hundred dollars each year. But, as we all know, a couple hundred here and a couple hundred there starts to add up. If you expect your income to rise, just ensure you give the government 100% of what you owed the year before (110% if your AGI is above $150K). If it is steady, try to owe $1,000 (the maximum you can owe without a penalty). The difficulty hits when you have changes in your life that lower your income as Patrick faced. It hurts to owe a few thousand to the IRS in April, but every positive financial move should hurt a little. Isn’t it more pleasurable to spend money than save it. However, saving builds your wealth and so does owing the IRS.

One caveat though: if you spend the money that would otherwise go to the guv during the year then it may not be smart. But, if you leverage it by capturing yield during the year and holding off on paying the government until April, it starts to add up. It creates cash flow even if it is only a couple hundred dollars each year.

But, as we all know, a couple hundred here and a couple hundred there starts to add up.

If you expect your income to rise, just ensure you give the government 100% of what you owed the year before (110% if your AGI is above $150K). If it is steady, try to owe $1,000 (the maximum you can owe without a penalty). The difficulty hits when you have changes in your life that lower your income as Patrick faced.

]]> By: David http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7219 David Wed, 16 Apr 2008 18:29:34 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7219 Owing is way better, as at least then they are not getting an interest free loan. That being said, we owed almost $4,000 this year and it kind of sucked. :-) Owing is way better, as at least then they are not getting an interest free loan. That being said, we owed almost $4,000 this year and it kind of sucked. :-)

]]> By: Dividend Investor http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7201 Dividend Investor Wed, 16 Apr 2008 13:23:06 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7201 It also seems to me that a loan to the government is ok for people who invest most of their money in the stock market through monthly contributions (in taxable accounts in addition to non-taxable accounts). What happens if you have to cough up $1,000 and the market has just tanked? Do you sell your stocks and have an opportunity loss of thousands of dollars in future dividends and capital gains down the road @ your retirement? Sometimes the uncertainty of future outflows to the tax man could make you stick your money in a bank deposit, earning not enough.. It also seems to me that a loan to the government is ok for people who invest most of their money in the stock market through monthly contributions (in taxable accounts in addition to non-taxable accounts). What happens if you have to cough up $1,000 and the market has just tanked? Do you sell your stocks and have an opportunity loss of thousands of dollars in future dividends and capital gains down the road @ your retirement? Sometimes the uncertainty of future outflows to the tax man could make you stick your money in a bank deposit, earning not enough..

]]> By: Mrs. Micah http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7185 Mrs. Micah Tue, 15 Apr 2008 23:51:47 +0000 http://cashmoneylife.com/2008/04/15/tax-return-better-to-get-refund-or-owe-money/#comment-7185 Best case scenario, small refund. Forced savings can be fun because they give you a big sum to put towards debt or into savings. I'd rather give the government a small interest-free loan and not worry about what I owe. Blog income makes it trickier, of course, which is one reason we're sticking with the higher withholding this year. Hopefully we'll owe less next year. Best case scenario, small refund. Forced savings can be fun because they give you a big sum to put towards debt or into savings.

I’d rather give the government a small interest-free loan and not worry about what I owe.

Blog income makes it trickier, of course, which is one reason we’re sticking with the higher withholding this year. Hopefully we’ll owe less next year.

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