So my friend tells me this weekend that he is going to get 2,500 dollars back from taxes. Wow is all I can say. He is single, no kids, and owns his own house. He makes ~40k a year and claimed zero.
I am single, no kids and live in an apartment and made ~30k. I did my taxes and can say I am dissapointed. Pissed actually. I claimed zero as well, but I think the stupid ass people in charge of these things fucked up yet again. For starter, I only had about 4000 dollars taken out of taxes. (state and federal) I get a whole whopping 600 dollars back from federal. Which isn’t too bad I guess, but I made the same last year and got back 850. WTF? (same claim on my W-2’s)
State is what pisses me off. I now owe them 80 dollars? God damn it fucking Missouri dumbasses. I claim zero so you will take the most fucking money out and I won’t have to pay you. They are getting a nasty note with their check this year. Take out more fucking taxes! GRR.
540 dollar tax return? Damnit. And my friend that only makes 10k a year more gets over FOUR times that? Ok, so he gets to deduct his property tax from his taxes, but I know it cannot be all that. Fucking state.
There was a new deduction this year - the Tuition and Fees deduction. I don’t have my books with me, but I believe that if you’re at least a half time student you may deduct up to $3000 of eligible tuition and fees. Check the IRS tax book first though (I had to file a 1040, so I know it’s in that one).
There are others that students can take - but not in conjunction with the T&F. Also, if you’re in repayment on any student loans, the “in the first 60 months of repayment” restriction is gone - now you can deduct interest at any point in time.
I’ve never understood this wanting to receive a large income tax refund. I’d much rather get $0 back every year. I hate the idea that I’m involuntarily loaning the goverment hundreds of dollar every year at a 0% interest rate. Then, to compound things, the government must borrow other money, at whatever rate prevails (something which they themselves have a hand in controlling), from other sources to return my own money to me. And finally, to further piss me off, tax rates are artifically inflated in order to pay the interest on the money they’ve just borrowed from the banks, all of which generates a lucrative tax-payer funded subsidy to the banking industry. It’s completely absurd and nearly criminal. There’s no earthly reason for this thing as it exists currently. The government, working with your employer, could very easily make more accurate estimates of reasonalbe income withholding and nearly eliminate these “refunds” and the stupid banking subsidy that goes along with 'em.
While I agree with the principle in a “zero-sum” game related to tax filing, in practice I overwithhold on my W-2. Not by much, but enough to prevent me from having a nasty shock come tax time. That’s happened to me once in my life, when I had to fork over several thousand dollars to Uncle Sam on April 15. I never want to experience that again.
Epimetheus, the difference between your friend’s tax return and yours can easily be explained by his property tax and mortgage interest. Those two items are traditionally the largest deduction for any taxpayer, unless you’ve also got a passel of children.
The reason I do the having-them-take-more-out-of-my-paycheck-thing is so that, instead of getting it a little at a time, I get it as one lump sum. That way, I can deposit it in my savings account more easily. Otherwise, I know I’d just spend that extra few bucks per paycheck. Putting in an entire check–independent of my pay–is much easier for me on a psychological level.
I do my best to end up breaking even at tax time. Unfortunately, our lives and income have been in such a state of flux for the last 6 or 7 years, what with moves, some years with partial state income tax, some years full state income tax, some years no state income tax - tax time is a major headache!! I’ve had to declare zero and have additional money withheld to achieve this break even. It’s nuts, because when we file, we have 3 exemptions. I don’t know who came up with the ways of calculating tax withholding, but the person or persons responsible should be flogged.
My income fluctuates greatly from year to year. Last year, I did make more than I’ve ever made in one year before, but not by a ton. Anyway, I did my taxes yesterday. Actually, I did them THREE times. See, the first time, I used Intuit TurboTax. Alarmed by the results, I redid them by hand, double-checking the software’s results. Yup, got basically the same thing. So I did it again, using H&R Block’s online tax doing-thingee (it’s free until you print out the results or have them send 'em electronically), and got the same results. It seems I’m getting back an astounding amount of money this year (well, an astounding amount for me, anyway). Yeah yeah, poor me. So why am I so concerned? It’s just that it’s so much more than I’ve ever gotten back before, I’m afraid I screwed up somewhere. Three times. I don’t want to get my hopes up too high; I could really use that money right now. There’s even a bunch of things I could probably legitimately write off that I haven’t figured in yet. So I think I might actually take my taxes to a tax accountant this year to do 'em, just to make sure.
Not trying to rub it in here to people who owe or are not getting back very much. Clearly (unless I really screwed up in doing my taxes), I way overpaid last year. As gazpacho said, I apparently gave the government a nice 0% interest loan last year
I too allow the gov’t free use of my money. I don’t mind too much since I end up using the ‘refund’ to pay off the credit card bills I ran up in December.
Ego_Mk2, because you’ve hit the nail on the head. Owning a home and having that mortgage deduction is probably the single best thing you can do to lower the tax burden. Contributing lots to the 401(k) also helps, and is what I try to do.
Unfortunately my situation is this: I live with my boyfriend, who owns the condo we live in. He gets the deduction. I do not. Therefore, I pay reams of taxes (mostly during the year via payroll deduction).
I’ve got to figure out a way to improve my tax situation if we’re going to stay shacked up and not married. It kills me to do my taxes each year. Cripes, I’m already putting 20% of my income into the 401(k)!
Ah, being a renter sucks when it comes to income tax.
Same gripe, different year. But I’m feeling much better now!
Good advice, unfortunately It wouldn’t be a good idea for me to buy a house at the time. I currently live in a small studio paying 215 dollars per month. Buying a house would raise that to 450-600 dollars a month. We will say 500 for a decent 60k house or so. 6000 a year for the house and only 2580 a year for the apartment. That and this summer I am going to start attending school. Two years from now I will be moving to go to a university to get a masters.
Buying a house isn’t best in all situations. What little I get back from the goverment will probably not cover the excess I will be spending for a house payment.
Of course not very many people are as lucky at finding a cheap apartment that is in good condition.
“Decent 60K house”? Does not compute…
Buying a house does generate a sizeable income tax deduction, but it also incurs substantial extra maintenance costs. So at best it’s probably a break-even proposition unless you do essentially no work on the house.
You’re not kidding…you couldn’t get a lean-to in a median strip for 60K in MA!
This is our first full year in our house, and I just completed our taxes. WOW! Huge refund (we claim 0…the boss demands it ;))…she’s ready for the new fence now. Wish I could convince her to be conservative and throw it in a 6-month CD, as I’m unemployed for the foreseeable future <sigh>
