Comments on: Large Tax Refunds- Good or Bad?

By: RC

RC — Wed, 11 Mar 2009 10:58:50 +0000

@TStrump- Good point-although some people use it as “forced savings”, it seems to me it is definitely better to plan more carefully and have use of that money throughout the year.

By: TStrump

TStrump — Tue, 10 Mar 2009 05:31:31 +0000

Large refunds definitely imply that you’re not tax planning properly.
I guess some people like to pay a bit more, because in a way, it’s like forced savings.
But, if you start the planning process before the deadline (Apr 30 here in Canada), you should be able to maximize your earnings without giving the government too much money.
Most people don’t plan, though.

By: RC

RC — Thu, 05 Mar 2009 12:10:31 +0000

@Slinky- I agree, and I have had the same problem over the last few years- having 2 children in 5 years, and my income has changed a good bit (luckily upwards a little!), that I have had a hard time getting it exactly where I want it. But I’d rather have a little more in my paycheck than leave it with Uncle Sam for a year (or longer) and get a large refund.

By: Yana

Yana — Thu, 05 Mar 2009 05:55:43 +0000

I consider large tax refunds very bad. I would rather pay a little than be owed at all, but also don’t want to have to pay a lot. I am not afraid of having money, and don’t need the government to “save” it for me. However, for one of my friends who gets around $6,000 minimum back, I think it’s what she has to do. She isn’t able to master her money. If her grown child “needs” something, she can’t say no if she has the money. Another friend likes a refund and says she likes to spend it on something unnecessary. That thinking is contrary to mine, because giving me my own money back makes me feel like a fool, not a recipient of a windfall!

By: Slinky

Slinky — Wed, 04 Mar 2009 18:04:18 +0000

Tax refunds are bad. I always prefer a small, steady, known income to an unknown, but larger windfall. It makes planning so much easier, and it makes no difference to the end result (assuming it all adds up the same). I normally have claimed single 2, but last year I did single 1 because I had so many changes and unknowns that I had to play it a little safe. After doing my taxes for last year, I’ve now got a handle on all of this, and just changed my withholding back to single 2. That’s another $25 a paycheck going straight to my car loan!

By: valencio

valencio — Wed, 04 Mar 2009 09:32:28 +0000

Thanks for these excellent tips.. Will certainly help in these trying times.

By: RC

RC — Wed, 04 Mar 2009 03:33:00 +0000

@Josh- Good article, I’ve been a fan of the writer’s coin for a while. It would be nice if the government would pay you some kind of interest on your refund, wouldn’t it? Sounds like something they could have stuck in the stimulus bill!

By: RC

RC — Wed, 04 Mar 2009 03:30:49 +0000

@Christina- Thanks! I need to adjust mine again as well.

@Grant- That’s what I prefer as well!

By: Josh Spickler

Josh Spickler — Tue, 03 Mar 2009 22:17:11 +0000

I just read an article on TheWritersCoin.com (this one) that soooort of talks about the same thing. In his article, however, he essentially talks about how taxes are like loaning money to the government and getting no interest on it. Personally, I always find myself needing the refund around this time of year. Maybe it's something to do with the holidays or my bills being higher because of the winter. I haven't really given it too much thought. I would love to be able to get some kind of bonus/interest from the government for loaning them that money though ;D

By: Grant Baldwin

Grant Baldwin — Tue, 03 Mar 2009 16:35:39 +0000

On one hand I understand what someone is saying when they prefer a large refund because it is a built-in savings program for the year, but at the same time, that makes them sound irresponsible.

Do you really not have enough discipline to set aside money each month? It comes across as childish to me.

Personally, when I do my taxes at the end of the year, I don’t want to owe anything and I don’t want to get anything back. I think that’s the way the government prefers it as well!

By: Christina

Christina — Tue, 03 Mar 2009 14:05:25 +0000

We also adjusted our allowances last year and are also getting a bigger refund than I wanted. We’re going to put the money toward our emergency fund and to replace an aging refrigerator with a more energy efficient model.

I’ll definitely be looking at the IRS calculator again to adjust… I don’t think we should let Uncle Sam use such a large chunk of our money interest free. I’d rather use it for a Roth IRA.

Good post!