I’ll put my $300 or so of tax credit and tiny refund right into the bank. It is free money for me, a grand sweepstakes prize for being so incredibly broke 
The Earned Income Tax Credit is the only advantage of being a perpetual student, so I hoard and treasure it excessively. Ah yes, and I will remember the horrible Year of No Refund, when I could have claimed the EIC, but was, tragically, only 24.
You know what they say, the truly educated never graduate :rolleyes:
I’ll end up owing a little, but that’s fine. I’ve gotten to keep more of my money during the year and earn interest on it myself. The amount of “total tax paid” will be the same either way.
I’m curious – what do consider a more realistic tax rate?
(Personally, between income tax, property tax, and others, I say the government already takes quite enough of my income, thankyouverymuch).
Call me an idiot then, except instead of $600, my check’s normally $3,000-$5,000. I know alot of people think it’s stupid, giving the government an interest-free loan, and all that. I DON’T CARE. I consider it my reward for having busted my ass as a single mom all year long and sacrificing as much as I do. I LIKE it this way. And who are you to say what money of mine belongs in the bank??
The point is that you could have had this same money over the past year and have done whatever you wanted to with it then, not waiting until now and losing out on interest if you chose to save it.
The point really isn’t “save vs spend”, it’s “hold onto the money yourself vs let the gov’t hold on to the money”. Aside from the forced savings (which may indeed be a benefit for some people) there’s really no reason for letting to gov’t hold on to your money. If you want forced savings, you can arrange for the extra money to go directly into a separate account.
Usually I put it right into my IRA. That isn’t enough, but it helps get me started for the year.
I tend to spend half of mine and keep the other half in the bank until it’s needed. This year, the part I usually spend is going to AmEx because I spent it before I even filed! Hey, I got a great deal on a 210 Gig HD and a good deal on a 17" LCD monitor.
That’s the way I try to work it, too. I’d rather have my money through the year.
What little refund I get is either going into my IRA or going into my savings so that if and (pleaseohpleaseohplease) when I get into graduate school it will help house, clothe and feed me. 
Ree-fund? What is this of which you speak?
I owe $200 + fed and $150 + state.
So, you could use that refund money to pay my taxes.
We try to the hit break-even spot as well, but if we get money back we save it to spend madly on our vacation.
What should I do with it? Put some away and pay off credit card bills.
What will I do with it? Put some away and pay tuition for my kids.
Zev Steinhardt
I wouldn’t be earning interest on it either way though since checking accounts don’t offer interest; I haven’t had a savings acount since I was 18 (1995), and back then they’d already slashed interest from 5% to less than 3%. How much interest would you get now, about 1%? whoo hoo, my refund (based on what I’ve gotten in the past few years) could have earned aprox $3-6 if it’d been in the bank.
I’ll probably buy a couple DVD sets of TV shows and use the rest for a student loan payment or two.
Ya know, I don’t care the IRS gets an interest-free loan from me. I like it. It’s like getting a little bonus. Or like finding a $20 in a pair of jeans before you toss 'em into the washer. Oooo! Look! Money I didn’t blow on stupid shit yet!
Actually, this year’s refund – assuming there is one since I have unpaid tax on freelance work I did this year – gets parked in savings for a minute or two until my company bonus pays out (assuming the company bonus pays out.) Together, that’ll be the downpayment on my brand new Mazda RX-8.
Hey, my Honda’s ten years old. I get to buy a new car now. I earned it.
Last year, I got my bonus from work (about 15% of my annual salary) and my tax refund (about $800) within about a 2 days of each other, with regular paychecks on the Fridays immediately preceeding and following the refund/bonus week. So for about 3 weeks, I felt like I was really rich.
I put $3000 into my new Roth IRA, and spent $1200 on a new computer.
This year, the bonus won’t be quite as big, but I anticipate the tax refund being about the same amount. I’m going to max out my Roth for 2004 (should only take about $600, I’ve been doing regular contributions throughout the last year). Most of the rest of the money will go into savings for a house downpayment in June/July. I may take a couple hundred to the local Poker hall and try to see how long I can last at 8-16 Hold 'em if I’m feeling really daring.
I like getting a small refund (it encourages me to do my taxes)
Isn’t there a minimum you have to have withheld? (ssuming you are working for someone else). I’m 99% sure you can’t just not have any withheld and pay all your taxes April 15.
With having a mortgage and deducting state income taxes pretty much guarantees a refund for me.
Brian
(plus this year I get the $2000 hybrid car deduction)
Federal tax refund goes to pay the inevitable state tax shortfall. Oy.
If I get a refund, it all goes straight into the mortgage.
I think some folks missed this part of the OP, but I sure am duly grateful they took a few moments out of their important investing day to help us feeble-minded folks understand math.
I always aim for breaking even, but with life events, ill-considered tax cuts, and the increasing complexity of my tax situation, I’ve gotten much bigger refunds lately than I wanted. This year, we had a baby, spent a bunch on day care, had dependent care costs deducted and reimbursed through a pre-tax account, continued with our mortgage, had our income bounce up and down due to maternity leave and financial weirdness in my company, and my calculations for my W-4 simply couldn’t take all of this into account. Now we’re getting back a little under $5000 in state and federal taxes, which I think will go to fill the hole that the dog’s knee surgery has put in our finances.
Same here. I think of it as doing my bit to help pay down the national debt.
Of course, the EIC probably negates any interest the government got off of it, but there ya go.