Tax Refunds--Whatcha gonna do with it?

[nmboone]

I am going to put anything I get (it is usually a tiny refund, maybe a few hundred) and put it toward car debt. I'm getting really close to paying it off! And yes I guess this group is a bit boring when it comes to spending our money, lol, but we love it because it makes us richer!

[cptacek]

It is going to the swather loan or my snowball.

[disneysteve]

Originally Posted by cptacek

It is going to the swather loan

Had to Google that one. Had no idea what a swather was.

[maat55]

I usually end up paying a little or getting a little, if I get a little it gets applied to the next quarter.

[kork13]

Originally Posted by disneysteve

Had to Google that one. Had no idea what a swather was.

Steve, you can't pique our interest and not elaborate! That's like giving an 8-y/o a tour of a candy factory and not giving a free sample!

Swather: the big guy that cuts hay/grain.

[maat55]

Originally Posted by cptacek

It is going to the swather loan or my snowball.

Without searching, I'm guessing it it farm related. Right? wrong?

[Ima saver]

If we get anything back, it always goes into savings!

[gertymac]

We're expecting the $8K for buying a home this year, but I don't think we'll get the full $8K due to owing a bit on our taxes this year.

So, what we get back is going to open and fully fund a Roth IRA for my partner. If there's anything left, it'll go to the emergency fund (and hopefully meet our goal of 6 mo worth of expense in the EF).

[Russell]

We're getting about $2k back which will likely go towards our "one home-improvement per year" project. Last year it was upgrading all the 20 year old windows and sliding glass doors. This year will be replacing the old carpet with composite wood floor.

If not there're several other things on our 'want list'.

[PrincessPerky]

1. Go out to eat
2. Replenish EF from the job loss, and then some

as to why we get a refund, we have our withholdings set so zero came out of regular paychecks, but overtime and bonus' we couldn't make them do that, there is usually a surplus due to him working a lot of overtime.

[Jazzmint98]

I probably won't be getting a refund. If I do, I plan to pay off some of my student loan and put the rest in my Roth IRA.

[Slandgie]

I would be curious to what the American public would answer to this. From the folks on here, the vast majority are saving it or paying off debt. I am sure that is not what the majority of Americans would answer!

[kri$ten]

Savings... gotta work on that EF.

[Joan.of.the.Arch]

Originally Posted by Slandgie

I would be curious to what the American public would answer to this. From the folks on here, the vast majority are saving it or paying off debt. I am sure that is not what the majority of Americans would answer!

I don't know, many people are being more careful with their money. Many are still unemployed; many are losing their businesses; many are underemployed; many are in fear of having wages or salaries cut back, if not their jobs lost entirely. These are sobering factors. I suspect the majority of USAers who get a refund will apply it to debt, apply it to current needs, or add it to their savings.

[disneysteve]

Originally Posted by Joan.of.the.Arch

I suspect the majority of USAers who get a refund will apply it to debt, apply it to current needs, or add it to their savings.

I think you are seriously mistaken. Just because most of the folks here on this forum are responsible with their money, the vast majority of Americans are not. I agree that some people seem to be starting to get the message but look around and you'll see they surely don't represent the majority.

The unemployment rate is only 10%. Yes, I said only. That means 90% are employed. Retail sales over the holidays held up pretty well. Airports are packed with travelers. Restaurants are packed with diners. Malls are packed with shoppers. People might be hunting for bargains a bit more, watching the sales a little more carefully and clipping a few more coupons, but they certainly haven't stopped spending on luxuries. Look at the excitement brewing over the new iPad from Apple, a device that exactly zero human beings actually need. That won't prevent Apple from selling millions of them.

Call me cynical but I think most people will do the exact same thing they always do with their refund - look at it as free money and spend it on whatever they've had their eye on for the past few months. That might be a new cell phone or digital camera or laptop computer or vacation or mag wheels or leather jacket. I've already heard a few people I know talking about their plans for their refund money and none of it involved paying off debt or adding it to savings.

[Slandgie]

I agree with Steve...first of all, the refund is not free money...it's money you have earned through out the year! People think it's a gift from the government...far from it! It was my money to begin with! Other people in my line of work (who pretty much make what I make) always get refunds in the $2K to $5K range...you woulda thought they hit the lottery.

If I get $1K back from the feds, that is on the high end. Usually about $200 to $300 goes to the state, so we have a little bit left over....

[KTP]

I should hide my head in shame because we get back about $5k a year

I think this stems from years ago when we were first married and miscalculated taxes and owed $2000 plus penalties. Back then it was a huge amount that almost cost us being late on our mortgage a few times.

I really should adjust it back to where we get $500 back or so, but I am always sure this is the year they are gong to jack us by not adjusting the AMT hit like they have to do every year.

[disneysteve]

Originally Posted by KTP

I should hide my head in shame because we get back about $5k a year

That's happened to us a few times. We always find it very challenging to accurately estimate our withholding because we can't predict all of our income. For example, one year a couple of our investments paid huge capital gains which were taxable. Another year, the gains were much, much smaller so we owed a lot less in taxes. My wife's employment status has fluctuated over the past few years - full-time at one job, then part-time, then none, then part-time at a different job, then contributing 50% of income to a 401k leaving a lot less taxable income. Plus, I get a varying degree of self-employment income from medical surveys, advisory boards, ebay sales, etc. Some years that may be close to 10K, other years a lot less. If I base my withholding off of last year's numbers and this year works out significantly higher or lower, it throws off the calculations and sometimes that results in a bigger than desired refund.

[cptacek]

Originally Posted by maat55

Without searching, I'm guessing it it farm related. Right? wrong?

Right. It is what cuts the hay and puts it into windrows so the baler can roll it up into bales. It is my "second job" during the summer.

[Radiance]

I think most people will do the exact same thing they always do with their refund -

Sadly, I think Steve is right, I hear my coworkers hoping for a huge refund and the plans are typically buying stuff they wouldn't be able to afford otherwise. They look at me funny when I say I am assigning the whole thing to paying off debt.

I have to admit until I read this thread I thought a big refund was a good thing.

Now, I maintain for some IT IS indeed a good thing. I have a couple of friends that say that is the only way they get some money on their savings account. It is a forced savings. When they get their refund, they send half to savings, half to spending.