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How are you spending your Tax Refund?

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Senior Contributor

Re: How are you spending your Tax Refund?


@Revelate wrote:

It's utterly lame they still have yet to update the W4 form.


??? Not sure what you mean. The W4 is pretty straight forward, and the current W4 is located here:

https://www.irs.gov/forms-pubs/about-form-w-4

It looks the same as it always looked to me: Name,SS#, address, and how many exemptions do you want to claim - which affects how much tax is withheld.


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Message 51 of 64
Moderator Emeritus

Re: How are you spending your Tax Refund?


@DaveInAZ wrote:

@Revelate wrote:

It's utterly lame they still have yet to update the W4 form.


??? Not sure what you mean. The W4 is pretty straight forward, and the current W4 is located here:

https://www.irs.gov/forms-pubs/about-form-w-4

It looks the same as it always looked to me: Name,SS#, address, and how many exemptions do you want to claim - which affects how much tax is withheld.


They literally JUST updated it within the last two days.

 

Which means the W4 form I filled out last week probably needs to be double-checked.

 

https://www.paychex.com/articles/compliance/new-2018-w4-form-calls-for-close-attention-to-withholdin...




        
Message 52 of 64
Valued Member

Re: How are you spending your Tax Refund?

Instead of going on a wild shopping spree this year I paid off credit card balances and even closed my Credit One starter card.  Put the rest in my Discover high yield savings for saving for a new house we'll hopefully be buying this time next year!

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Message 53 of 64
Senior Contributor

Re: How are you spending your Tax Refund?


@Revelate wrote:

@DaveInAZ wrote:

@Revelate wrote:

It's utterly lame they still have yet to update the W4 form.


??? Not sure what you mean. The W4 is pretty straight forward, and the current W4 is located here:

https://www.irs.gov/forms-pubs/about-form-w-4

It looks the same as it always looked to me: Name,SS#, address, and how many exemptions do you want to claim - which affects how much tax is withheld.


They literally JUST updated it within the last two days.

 

Which means the W4 form I filled out last week probably needs to be double-checked.

 

https://www.paychex.com/articles/compliance/new-2018-w4-form-calls-for-close-attention-to-withholdin...


Nevermind I just saw he update link in the article. 

 

 


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Message 54 of 64
New Contributor

Re: How are you spending your Tax Refund?

I did it the right way in 2018. I went federally exempt the majority of the year, and paid the remainder due in full when I filed my taxes. So I got no tax refund this year, federal anyway.

I’d rather hold on to the money than overpay and get a refund. And the income tax situation is so confusing and convoluted. I always felt like I was getting screwed when I got my paycheck. And never felt quite sure the math added up in the end. Sure I’d get a $1200 refund, but it felt like they took a lot more than that throughout the year, especially the bonus checks which would get taxed at the maximum rate, I don’t know why.

I paid a $35 underpayment penalty for going exempt. Well worth it if you ask me
Message 55 of 64
New Contributor

Re: How are you spending your Tax Refund?

My husband and I accidentally owed taxes the first year we were married- we ended up doing cash advances on every credit card to pay that off. Since then, we've had our taxes withheld at the higher single rate. It definitely sucks to have the government hold your money all year, but, I prefer that to finding out I owe them at the end. 

 

My parents got hit with a hideous tax bill this year. They thought they had gotten a tax break with the new law- I told them to withhold extra because I actually read the new tax law, but, they thought I was wrong. My retired parents, on social security, have to come up with $7300 in taxes instead of getting a refund.

 

Most of our return will go to our bankruptcy trustee- the remaining bit we are going to use for a new water heater and hopefully a new garage side door. 

I filed my return on January 23rd, it was finished processing to the point where I could download the transcript on February 18th, but, IRS has yet to generate a check. 

 

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Message 56 of 64
Regular Contributor

Re: How are you spending your Tax Refund?


@Jenniferinfl83 wrote:

My husband and I accidentally owed taxes the first year we were married- we ended up doing cash advances on every credit card to pay that off. Since then, we've had our taxes withheld at the higher single rate. It definitely sucks to have the government hold your money all year, but, I prefer that to finding out I owe them at the end. 

 

My parents got hit with a hideous tax bill this year. They thought they had gotten a tax break with the new law- I told them to withhold extra because I actually read the new tax law, but, they thought I was wrong. My retired parents, on social security, have to come up with $7300 in taxes instead of getting a refund.

 

Most of our return will go to our bankruptcy trustee- the remaining bit we are going to use for a new water heater and hopefully a new garage side door. 

I filed my return on January 23rd, it was finished processing to the point where I could download the transcript on February 18th, but, IRS has yet to generate a check. 

 


Sorry to hear of the tax due for your mom and dad. That's not an easy one. The tax law was pushed through without adequate time to make necessary adjustments. The tax change was signed 12/22/2018 effective 1/1/2019. The IRS was not able to get up to speed in that short time frame. 

 

It's unfortunate that so many people are in this situation. I read the law too. I followed along as the bill was being drafted and passed.  My taxes are increased significantly. Quarterly estimated tax payments left me with a slight overpayment. The few extra dollars are applied to current year. 

 

I hope your parents are able to handle this without significant hardship. 

Message 57 of 64
Senior Contributor

Re: How are you spending your Tax Refund?


@plasticbill wrote:
I did it the right way in 2018. I went federally exempt the majority of the year, and paid the remainder due in full when I filed my taxes. So I got no tax refund this year, federal anyway.

I’d rather hold on to the money than overpay and get a refund. And the income tax situation is so confusing and convoluted. I always felt like I was getting screwed when I got my paycheck. And never felt quite sure the math added up in the end. Sure I’d get a $1200 refund, but it felt like they took a lot more than that throughout the year, especially the bonus checks which would get taxed at the maximum rate, I don’t know why.

I paid a $35 underpayment penalty for going exempt. Well worth it if you ask me

You did not do it the "right way".   If you read the w4 to claim exepmt you had to have no federal tax liability last year and expect to have no federal tax liability this year.   Exempt is not there so that you pay all your taxes when you file, it is there because you have no taxes to pay.

 

Doing it the right way is to be +/- $100 when you file.  You paid $35 EXTRA in federal taxes.   Did you make $35 in interest on the money you did not have witheld?   If you didn't then you lost money on this deal. 


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Message 58 of 64
Moderator Emeritus

Re: How are you spending your Tax Refund?


@MakingProgress wrote:

@plasticbill wrote:
I did it the right way in 2018. I went federally exempt the majority of the year, and paid the remainder due in full when I filed my taxes. So I got no tax refund this year, federal anyway.

I’d rather hold on to the money than overpay and get a refund. And the income tax situation is so confusing and convoluted. I always felt like I was getting screwed when I got my paycheck. And never felt quite sure the math added up in the end. Sure I’d get a $1200 refund, but it felt like they took a lot more than that throughout the year, especially the bonus checks which would get taxed at the maximum rate, I don’t know why.

I paid a $35 underpayment penalty for going exempt. Well worth it if you ask me

You did not do it the "right way".   If you read the w4 to claim exepmt you had to have no federal tax liability last year and expect to have no federal tax liability this year.   Exempt is not there so that you pay all your taxes when you file, it is there because you have no taxes to pay.

 

Doing it the right way is to be +/- $100 when you file.  You paid $35 EXTRA in federal taxes.   Did you make $35 in interest on the money you did not have witheld?   If you didn't then you lost money on this deal. 


I suspect that answer is an easy yes: you could pick stocks by Oujia board for the past several years and get a 10% return and the result income even with taxes taken out of it would be substantially above that penalty.

 

Only $35 penalty I'd have let everything ride every single year as the market has gone up something like 2/3 of the time in the course of a year and probably come out way ahead, but I think that penalty is a sliding scale. 

 

Not sure I really want to risk that, but I did change my withholding back and will just make quarterly payments to play some SUB games potentially on SP business cards, yay.

 




        
Message 59 of 64
Moderator

Re: How are you spending your Tax Refund?

Yes, that underpayment penalty is a VERY sliding scale. I won’t mention exactly where it has slid for me a few times. 😂

Message 60 of 64
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