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May 15, 2013


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I am in the $75-100K and I wish those were my refunds. I think kids and dependents count for a large part of it Considering how much it costs to raise children and have a dependent, it's a refund well deserved. I normally spend my refunds topping off my individual roth account or HSA if I haven't paid those in full. Any extra is invested in my brokerage outside a small sum I keep for myself to go to a concert or something.

It is nice to get a refund, but I'd say those are too high from a planning perspective. Ideally, getting nothing back and paying nothing is best, but most Americans will never understand that.

As far as what I normally do with mine? I normally save it or invest it, but this year I used it to add a tiny bit of money to our house down payment.

Our refunds usually go toward various savings goals, including car repair, eventual replacement car, home repairs, kids preschool, and travel. Nothing too exciting but it makes paying for stuff a lot easier when the costs come.

Keep in mind those are averages. You say for people making 25k a year that seems high, but some of those people might have millions in tax-deferred income and their taxable income is only 25k. People like that, who are playing tax games with RIRAs, IRAs, 401k, and capital gains, could be off by 50k, while only reporting 25k in income, and that would affect the average as an outlier. Also as mentioned the refundable credits on the low end is money you can't not withhold. Another source of error, playing the withholding game and deciding to start school halfway through the year. Lots of deductions or credits as a student for which people didn't tax plan.

I've been filling my IRA with my refund. I'm in the last group and my refund right about covers it. It's nice to have the added flexibility of $450/mo cash flow, and if I needed the money I could spend it somewhere else, which isn't the case with a monthly withdrawal.

I don't like giving the government an interest-free loan, but as FMF said, its hard to estimate, I claim additional exemptions on my W-4, etc.

Wow... for my range, that refund amount is more like my total income tax burden. Of course I'm single, and I use standard deduction, so I'm usually pretty close to even. The last 2 years, I've had to pay 50-100, mostly because I some taxable investments.

I can see that I'm probably the only retiree posting on this topic.

I haven't had any income from wages or salaries since I retired and also haven't had any tax refunds so at least I'm not loaning money to the government every year and our investment income is almost all tax exempt or tax deferred.

Ever since we turned 70 our primary tax liabilities come from having to make minimum required distributions on our IRAs which are pretty large. One thing I learned that is very convenient is that if I have our estimated state and federal taxes withheld from our MRDs in late December both the State and the Feds treat that money as if it was received in instalments during the year which saves me the bother and nuisance of having to file quarterly returns.

Our income can occasionally spike due to realizing capital gains. That is hard to predict, so we generally withhold more than necessary, in order to avoid the penalties on withholding too little.

I try to keep it to zero, and those numbers in the article are way too high! If I got that much of a refund I'd be kicking myself for not figuring out my withholding properly. My deductions are pretty constant each year but last year I owed >$500. This a small fed refund but owed on state... I'd rather owe a bit than get a refund.

As a military family, we make around 50-60k depending on bonus disbursements that year. Because of different non taxable allowances (food, housing) and retirement contributions, only around half our income this past year was taxable. (Next year will be a bit different b/c of the new Roth option for the TSP.) We received a $4000 refund this year. Most of that from the Child Tax Credit and the Earned Income Tax Credit. I've upped our exemptions to try to cut our refund down for this current year. Our refunds definitely jumped after our son was born. Previously they were in the <1000 dollar range.

In 2012 we got a nearly $6k refund. We would definitely prefer to owe at tax time, but the refund was due to paper losses incurred by purchasing two rental homes in 2012 so it was something we couldn't have really adjusted withholding for. So this year we were happy to have a refund.

I note they cut off at $200K....that's where you really start feeling the AMT pinch if you're salaried. I owed over $4000 this year (federal) despite having normal withholdings on my paycheck and only modest additional sources of income. Whee!

Why is the WSJ focusing on "refunds"? Isn't the more important story the taxes paid by those income brackets?

I don't think the average person realizes how much they pay in a given year because they're focused on how much money they "get back" from the IRS.

Reading the WSJ table quickly may lead some readers to think that higher incomes get a bigger benefit, when obviously they actually pay way more.

I got slapped with penalties one year, and since we don't really NEED the money except once a year--we use our tax return money for big, single purchases and projects that we've been planning on--we don't mind letting the government have it for a while in case my free-lancing brings in a lot more than expected int he fourth quarter.

Those refunds seem really high. We always owe the IRS. This year we only owe $300. Whew! Last year we had to send in a $3,000 check. That wasn't fun.

Our taxes are too variable for me to figure out our tax bill with much accuracy in advance. I have variable bonuses at work, variable stock incentives and variable rental expenses and revenues. Put it all together and its not at all easy to figure our taxes in advance.

Although we're well into the upper bracket, I talk with my tax advisor 2–3 times a year to make sure we don't get a refund. My goal is to always owe the IRS as much as possible on April 15th without accruing any penalties.

We're generally fairly accurate, but we were off a bit this year and ended up getting $1,000 or so back.

We got hit for the first time ever with a payment - $7K to federal (but $2K state refund, so net $5K). Not a pleasant surprise - we always have a few thousand in refund and I was expecting similar. However, a combination of unusually good income last year (above the brackets in the article), aggressive downpayment of the mortgage, AMT penalty and here is where we ended up. Timing wasn't great, as in the first half of the year we had some significant other expenses - first time we have both kids in [prepaid, expensive] preschool, some post-hurricane cash outlays, and some financial help for family. So we had no buffer left and I had to hit the emergency fund.
Even with all the financial logic I would still prefer to break even or get a small refund.

I'm happy to see that my loan was lower than average for my income level.

For the next 4 years I want to get some back. I need to fill out the FAFSA for college kids and I don't want to owe thousand when I have to submit my 1040 and FAFSA in Februrary.

OTOH I don't want to be getting back thousands when I will have 2 in college for the next two years.

IMO people get back way too much which I think is stupid. For someone earning $25k $200 a monthin is ALOT of money.

I try and get back as little as possible, hopefully +- a thousand or so. Usually we're right on but due to a solar PV install credit our refund is larger than normal.

The numbers seem a bit high to me, but I have found it harder to stay on top of taxes myself as my finances have prospered. I'm still below these numbers, but I've gotten closer over the years.

The sad thing is if you're single, employed, don't own a home, and don't have any dependents: you get raped by the IRS.

In 2012, I paid almost $8K in federal income tax and still owed about $100. Yet if I had a mortgage and any number of kids, I would have gotten a huge refund. It sucks to subsidize everyone else's taxes.

I try to either owe a bit or be as close to zero as I can. Haven't got a refund in years.

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