Returning $$$ back for stimulus checks

[cmjust0]

Those of you who "need" your tax refund at the end of the year....you do realize that's your money, and has been all year right? You've just been giving extra to the government with every paycheck and they've been using it -- interest free -- all year long.

It makes much more sense to figure out how much you'll owe, adjust your withholding accordingly, and put the "extra" straight into an interest-bearing account. Yes, you'll get little or no refund back at the end of the year, but you won't need it...you'll already have it! It will already have been adding up and growing through interest in your own account all year long!

If you wind up owing a little bit at the end of the year, that's even better...just pull the money out of your interest-bearing account and pay the IRS. That way, the government gave YOU an interest-free loan all year!

Bottm line...using your tax withholdings as a savings account is a really bad strategy.

 

[Mac in Wisco]

Quote:
No, it's not. During the Bush administration people were receiving stimulus checks. The stimulus bill this year didn't give any direct payments. It provided for a $400 tax credit for working individuals and $800 for couples. They changed the tax withholding rates so that people would see their tax credit over the course of the year instead of receiving it as a large tax refund.

If you withheld at the Single rate then it worked out to about $400 back in your paycheck over the course of the year, which works out fine for those with a single job. If you withheld at the Married rate, which is higher to account for the higher taxes that two incomes would pay, then about $600 less was withheld from your pay over the course of the year. If a couple both withheld at the Married rate, they saw an extra $1200 this year, yet the tax credit is only $800 for couples. So there is a $400 adjustment to be made at tax time.

Bottom line is they still received an $800 tax credit and a $400 interest free loan for the year.

 

[Mac in Wisco]

Quote:
Exactly, I keep a spreadsheet and try to make it balance to $0 at the end of the year.

I remember a young kid I worked with in the Air Force. He had a wife and three kids relying on his income and was continuously complaining that he couldn't make ends meet. At the end of the year he received a $4000 tax return and spent most it on a new computer system. I tried to explain that that was not a government handout at the end of the year, that it was his money all along, and if he adjusted his withholding he would see an extra $350 month in take home pay. He still didn't understand, somehow he got out of his enlistment early as he claimed it was a hardship on his family.

 

[Mac in Wisco]

Quote:
This was well publicized in April and May when it was implemented. Most employers warned people to check their withholding rates if they were a multi-income family.

If you don't want your tax credit for the year I will gladly take it.

 

[rainplace]

Quote:
This.

 

[warmfuzzies]

My dad has always told me, since I filed my first income tax at 15 for a babysitting job, that you NEVER want to give the government your money and get it back at the end of the year.

Only claim as much as you have to, and then budget instead of depending on your refund.

The only exception if for people who (like us) are not getting a 'refund; at all, but rather getting the EITC, which is a 'credit' and it not the same at all. That is not money that you earned and had the government set back, like your refund is.













Right?????

 

[pamperedpoultry]

well Im just up the creek I guess, but not as bad as one guy at my work, he looked and for the whole year so far they have only taken out $81 since he claims his 3 kids throught the year...OUCH!!

 

[pbjmaker]

There was also an actual stimulus check that was sent out to retired people and I believe the disabled this last year. My parents got it.

 

[rainplace]

there were stimulus checks for the 2008 tax year. There were lots of misunderstandings about those too.

 

[Mac in Wisco]

Quote:
Yes, my wife got one since she is a disabled veteran. Nobody is asking for repayment of those stimulus checks, nor are they asking for the Making Work Pay tax credit to be repaid. There is only an adjustment for those whose withholding didn't match the tax credit due to them.