Two Questions on Tax Refunds

Here are two questions about tax refunds:

• Are you going to get one this year?
• If so, what are you going to do with it?

I have not yet received my final tax return, so I'm not sure whether or not I will get one. My guess is that I will since I overpaid Social Security taxes (because I changed jobs). If I do, I'll simply save/invest the amount. I don't look at it as "extra" money and won't plan on going on a spending spree.

How about you? What are your answers to the questions above?

FYI, the average refund this year is over $3,000.

Comments

[Matt]

$5138 due to American college affordability tax credit of having two in college at $2500 each. Otherwise I would have only gotten back $138

Right back into the college fund.

[saver55]

$3500, due to change in jobs and one child staying a dependent when I didn't expect it. Will use it to go on a trip this summer.

[Mrs. Pop @ Planting Our Pennies]

Our refund will be about $1400, due to a smaller amount of non-monetary compensation this year than the year before. We'll invest it along with the rest of our monthly excess after the IRS sends it our way.

[Jon]

I work very carefully to ensure that my tax refund or payment at the end of the year is very small. When my (under $200) refund arrives, I will use most of it to pay the State tax bill, and just absorb the leftover in the checking acct.

[#7]

We owe $4000 federal and $8000 state. I just finished taxes last night.. Our income was actually down from last year, but had some capital gains from liquidating a mutual fund.

I need to look more closely to see if/how much we are being impacted by the new tax laws.

[Mike]

Getting one for the first time in years. It's <1000, so I'm using it to pay down our auto loan.

I've already adjusted my withholding to reduce my return for next year with the goal of being as close to 0 as I can.

[Kathy]

We have a whopping tax bill this year due to acquiring and then selling some properties. Between state and federal we'll be paying over $40,000. Makes my brain hurt just thinking about it.

[Tommy!]

We just received our >$12,000 refund. It's so damn high because I retired last year and our AGI went from 230K down to 109K allowing us many credits/deductions we were not entitled to before. Heck I guess I should have retired sooner!

AFA plans for it, we'll use it to build a two stall garage up at our cottage.

[getagrip]

About $2500 from fed and state combined. That's only because college kids and the credits, otherwise I would owe.

Going to put it toward replacing our old refigerator and towards helping one of the college kids get a vehicle (dollar for dollar match on what they put up).

[ALR]

We're getting $3600 back from the fed and < $1000 from the state, which is down from the nine grand we recieved last year. It's mostly due to excess chartiable giving which we've stabilized in 2014.

It going to increase our cash cushion because my husband is looking to change jobs ASAP.

[Katelyn]

We received 3075. At least half of that from child tax credit and earned income credit.

[JTS]

We will end up owing, but I haven't finished up our taxes yet to determine how much. My wife worked part time, and we didn't do a good job of adjusting her withholding to compensate for our tax bracket.

We won't be doing (or not doing) anything as a result of this. :o)

[Ivy]

We are paying $5100 Federal and getting $3800 refund from state. This has been the case last year as well, with mortgage getting low and most income coming from salary, we don't have much deductions-wise (though we still get hit by the AMT).

Just making sure we have enough money in the checking account to cover this, especially since IRS always collect half a month before State sends in the refund:-(

[Jen W]

Around 5k total between fed/state. Will be putting into our basement renovation fund (debt free here).

[Dave]

We're getting $7600 from Federal and $1700 from state. New baby, first year for full mortgage deductions. We may need to use some to take care of a tree issue in our yard, but otherwise looking for a good place to put it. We'll probably just stick it in an index fund.

[Cody]

We received a refund of $3454 primarily because of a new baby and education tax credits. The refund was applied to our student loan balance.

[Elizabeth]

I usually always owe, preferably. I did get a small state refund $190.00. Just transferred it so savings...boring stuff.

[Steve]

My estimated taxes were about $2K short in total, close enough for my back on the envelope calc every quarter

[JEffinWesternWA]

$319 refund...it's great to be a multi-millionaire AND pay only $4500~ ish in Federal Income tax, year after year, having a tax effficient portfolio, keeping much "income" oriented assets (as possible) in an IRa where not taxable and having a fairly efficient stock/bond portfolio helps, as does Va disability compensation, that portion of my income is tax free, and again, the standard deduction was at least $1K~ more than I cold have deducted through itemizing...

[Jamie V]

I already got my $2,700 back and put it all towards one of my student loans, more than halving it. It's a guaranteed 6.8% return for sure!

[Sarah]

Got almost $5500 back. Spent about $1000 of it on travel, used the rest to fund most of this year's Roth. There is no debt to pay down.

[No Nonsense Landlord]

I will have to pay ~$8K, on top of over $20K already....

I am not doing anything with it, but pay...

[Ali]

$400 into emergency fund. I'm happy both that we don't owe this year and that the refund isn't huge, either.

[JNEW]

In the event we end up owing money, I simply add the appropriate amount to our KEOUGH account so that the amount owed disappears. That way it always comes out to zero ( or really close to it).

My taxes were up this year. Obama's attack on the wealthy is kicking in.

*Medicare tax have increased,
*investment income taxes have been increased.
*A higher top income bracket has been established.
*No college credits or deduction available for me ( AGI too high)

[Kathy]

Due to the acquisition and subsequent disposal of rental property from my mom, our tax bill is a whopping $$0,000 this year. No refund here. We deliberately plan our taxes so we don't get one. As long as we don't incur an underpayment penalty, we try to owe, or at least break even at the end of the year. No interest free loan to the government here!

[Kathy]

Oops, typo above. I meant to type $40,000.

[Kay]

I have boring, easy taxes, and got $340 back this year. $100 was used to pay the state tax and the rest went into the IRA. Big money ha ha!

[CM]

We owe again this year. $550 to Federal and a $56 refund from state. And that's after we contribute $5500 in a traditional IRA for my husband and apply the credit.

I'd like to at least GET a few hundred back next year so we're not dreading April 15th year after year.

[JimL]

We had a good year, but that means we have to pay in more. Between state and federal, we wil be sending in a check for another $5200.

[Old Limey]

Since our earned income is zero we don't have taxes withheld periodically during the year but have large amounts witheld for taxes from the mandatory required distributions (MRD) we make from our IRA's every year. In December 2013 we had $39,535 withheld for the IRS and $21,391 for the California Franchise Tax Board.

The net result is that our IRAs keep shrinking, but our Trust Account keeps growing, as does our tax deferred bond portfolio and our net worth. Ater 22 years of retirement we now live almost exclusively on our pensions and social security income since our expenses are now quite low.

The MRD calculator is pretty good since it is designed to not deplete your IRA until you reach an advanced age that hardly anyone will ever attain.

[Old Limey]

I just ran Fidelity's MRD calculator and assuming that my IRA will continue to grow at an annual rate of 5%, it will be totally depleted when I am 116. I'm currently 79!

[Mike C]

I have to pay ~$600 Federal but I am getting back ~$600 state so it basically nets out.