Poll re Income Tax: are you expecting a substantial refund??

16 years ago

At an investment advisory that I check, they're running a poll today.

The topic, in these days on increasing interest in the income tax system, is asking what level of income tax refund we are expecting.

-large enough to buy a new car . . . . . . . . . . . 3%

-big enough to go on a major shopping spree . . . . . 28%

-sufficient to finance dinner and movie (skip popcorn) 16%

-I plan my tax carefully - don't pay more than I have to 14%

-*Refund?? ... I wish!!* . . . . . . . . . . . . . . . . . 39%.

Almost half say that they expect a refund.

Many personal financial advisors recommend working out your system so that you get a minimal refund ... or, better yet, none.

If you have a $1,200.00 refund, you made a $100.00 loan (interest-free) to the government at the end of January last year, another $100.00 at the end of February, building to $300.00 at the end of March. You are willing to have another $100.00 monthly added to that interest-free loan to the government ... until the grand total arrives at $1,200.00 at the end of December.

In Canada, that loan used to continue at $1,200. until the deadline date for the tax returns to be filed at the end of April, then began to accrue interest as of May 1 of the following year ... 15 months later.

A few years ago, they advanced the date at which they begin to pay interest to the middle of June. About the time that they begin to pay out the refunds, I guess.

If some of you are happy with being so generous ...

... I'm happy to join the line of folks that would like to receive the benefit of your largesse, making us a substantial interest-free loan (even if it may be somewhat temporary).

I'm thinking of buying some stocks, at the moment, and may use my current credit card to buy them, while applying for a 0.9% interest rate credit card that'll run for a number of months and transferring that amount to it when it is issued.

Then pay off that loan just before the low rate runs out.

And be careful not to charge anything else on that card until I pay off the full amount just before the low rate runs out ... and, being a senior, I can pay off that amount at my bank without transaction fee.

Then cut up the card, if I feel like it.

Maybe keep it for use when dealing with issues online, insisting that the issuer maintain a low credit limit, throughout.

I hope that you can avoid paying too high a rate of income tax.

I paid about 9% last year, I think.

ole joyful

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Comments (29)

Lillie1441
16 years ago
Sadly,I will be paying almost enough to "buy" a new car! Due to a large "windfall" from the sale of mineral rights inherited from DH's parents in 81 we will be paying a lot this year. Makes me sick that we have to pay so much but we were able to pay off all our debts from the sale,which will be nice since DH retired in Jan.
janemarie5
16 years ago
We are getting a nice little refund.. I may be in he minority but we like to get a nice little sum back. Last year we used it to help pay for DSD wedding and this year will use towards other DSD college. So, we will not be changing our deductions even though we get enough back to go on a shopping trip. We feel that it's probably money that would slip through our hands or waste.
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Hi again, everyone, Update on the above info, offered by my friend the accountant whom I first met at the investment group about 5 years or more ago. The guy who retired last year, without a pension, and who now borrows at about 6% (interest deductible when used for investment) and puts it out to earn about 12% (much of current return at low tax rate, some of it deferred, to be taxed at low rate when withdrawn). He says that the amount of current income that that can be obtained free of tax is closer to $50,000.00. Same provisos as outlined above - with possibility of bumping up the amount that is received free of tax given some of the situations as mentioned. Sorry that the situation applies only to Canadian residents, folks. Good wishes to you and yours. ole joyful P.S. We had a visitor/new member at our investment group last week, who said that she felt rather at sea, among such skilled investors. We told her not to feel bad - that in the investment game, there are no stupid questions. That she should ask any of us to explain various terms or situations that were unfamiliar to her. Each of us learns as we go, a step at a time. Compensation usually increases commensurate with increased knowledge! o j
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I'm going to add a little wisdom here based on my experience. I've been a tax preparer for 14 years, completed over 3500 returns, and taken more than 500 hours of training. I've had experience with various types of tax organizations. Deciding who to go to to prepare your taxes can be confusing. Let's change that! Here is an explanation of the differences of a CPA, tax preparer, and an EA -- and -- some information about how each of them work. I hope this will help you pick the one that best works for you! ~ An Enrolled Agent (EA) is a designation by the IRS that the individual has passed a knowledge exam on taxes that allows the EA to represent a taxpayer infront of the IRS. An Enrolled Agent may be a tax preparer or a CPA. Not all tax preparers or CPA's are Enrolled Agents. ~ A CPA is Certified Public Accountant. They received this designation by passing knowledge exams on numerous accounting areas. Many CPA's specialize in a specific area of accounting. If you go to a CPA make sure they specialize in taxes. Not all CPA's specialize in taxes or are Enrolled Agents. The CPA must be an Enrolled Agent to represent you infront of the IRS. ~ Tax preparers are trained to prepare taxes. Often they have a educational background or work in accounting but not necessarily. Their knowledge varies based on the number of years they have prepared taxes and educational courses they have taken. Tax preparers at H&R Block begin with a basic training course of 66 hours of class time plus additional hours for updates on new tax law changes and on-the-job training hours. Students of the basic training course must pass a final exam to qualify to work for H&R Block. Experienced H&R Block tax preparers are required to complete a minimum of 30 hours of training each year plus additional hours for updates on new tax law changes. Many tax preparers at H&R Block and smaller tax prep firms are Enrolled Agents. ~ H&R Block charges are determined by the forms used and what is filled in on the form. If you require H&R Block to do bookkeeping (you know that brown bag of receipts) they will charge an additional hourly fee. ~ Most CPA's charge on an hourly basis. From my personal experience the cost of going to a CPA is about 2X the cost of going to H&R Block. Some local firms are even less but may not have an EA or year-around office to help if there is a problem. ~ If you go to H&R Block you will sit with a tax preparer as they prepare your return. The preparer will ask lots of questions, answer questions, and make suggestions for future tax savings. Unless there is a complex tax issue that needs to be researched or missing information, the preparer will complete your return while you are there and you can take it with you when you go. ~ If you go to a CPA they may have you sit with them as they prepare and complete your return -or- they may just have you leave the tax information and call you to pick-up the return when it is completed. ~ Many CPA's hire tax preparers such as myself (often current or former H&R Block preparers) to complete the return. The CPA reviews the completed return and signs it as the preparer and presents it to the client. This is very common in our area especially with larger accounting firms. ~ Tax laws are complex and change each year. I've amended returns prepared by individuals, H&R Block, other tax prep firms, and CPA's. Anyone preparing your return can make a mistake. ~ If you prepare your own taxes on-line be sure to print a copy for your records. The on-line programs are great for simple returns (such as those with just W2's and interest). ~ If you want to purchase tax software Turbo Tax and Tax Cut are the most popular. Be sure to print a copy of your return for your records. The software is a great choice for a return that is not complex and if you are willing to take the time to research items that you are not sure of. ~ If you choose to go to H&R Block or a smaller tax firm call and request an appointment with an experienced preparer and let them know you would like a preparer that will spend time reviewing and explaining your return in detail. They will schedule you with a preparer that meets your needs if they know when you call for an appointment. ~ To find a good CPA or tax preparer ask friends and family for recommendations. Ask them why they like their preparer and see if it matches what your looking for. If you find a someone you like then call next year to schedule an appointment specifically with that person. As for the original poster ... from her explanation they have a rather simple return. If she felt confident to do her own return she could go online and do it. It sounds as though she wants to learn but would like some help this year so going to a professional might be a good idea. Since the return seems to be rather simple I think an experienced tax preparer would be less expensive than a CPA. I'd suggest calling for an appointment in advance and requesting that the appointment be scheduled with an experienced tax preparer that will be willing to answer lots of questions.
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Hi Sasafras, In a savings account/CD/money market acct. ... you must pay some to tax. Plus, since number of dollars in asset can't grow, inflation erodes its value annually ... so you must add value of inflation to the basic asset in order to preserve purchasing power. You can keep what's left. Into the coffee can ... no income ... so no tax. But - you still lose to inflation ... so you're going downhill, even faster. ______________________________ Can you handle about a score of questions - you read correctly, more like a score than a dozen. Are you receiving employment income ... and does your family depend entirely on one income or are there two available (i.e. - how secure?)? Are you retired and receiving a pension ... do you have investment income as well ... do they meet your current operational needs? If we were dealing with a long-term financial plan here, I'd ask whether your retirement incomes were at least partially indexed, and at some time would want to evaluate with you how long you wanted that retirement income to last and whether you'd evaluated for inflation. If employed, how secure is your current income? Are you worried about layoff? How probable may it be that a money-hungry emergency may crop up? Any idea how soon? Do you have some extra asset that's available quickly, in case of emergency? Many financial advisors recommend that most people have 3 mos.' income available in case of emergency, layoff, etc. - and feel more comfortable with 6 - 9 mos.', or even up to a year's worth, depending on the possibility of major emergency, paycheque going up in smoke, etc. Those who have a financial cushion on hand in case of need can rest a lot more comfortably at night than those who lack it! Under certain circumstances, I might be willing to have lower concern about that emergency fund immediately available: I often don't have it, myself ... but I have an alternate plan in place. Do you have current debts, e.g. credit card, fuel bill, etc? At what interest rate levels? Is it deductible? For example, if you carry credit card balances owing over due date, do you know what rate of interest they are charging? On regular cards, usually 15 - 18%; on store-issued cards, usually 25 - 28%, sometimes more. It may well be a good idea to use it to pay off some of the outstanding debts, especially the high-priced ones. How long do you think that you may want to leave this money invested? One month? Six months? One year? Six years? (Sixty years?) What kind of investments do you have now? How long do you expect to have them operational, e.g. do you plan to draw some down in the short/medium to buy a car, send kids to school, buy a home/cottage, etc. Are they producing a good rate of return? Is there a possibility of some growth? Are they reasonably well diversified? If you plan to liquidate some ongoing investments to buy something soon, maybe invest this money in savings account, Money Market, etc. and leave the other investments alone ... especially if there is some capital gain developed that you'd have to pay tax on if you were to liquidate them soon. Would you feel comfortable using some of your refund to make some investment in equities, ordnarily? How about now ... with the market having gone down substantially ... many are saying that stocks are on sale, these days! There's been some recovery, but they may go either up or down from here. They may be on fire sale, later. But if they go up from here ... and keep going up ... in a couple of years you'll be kicking yourself ... wishing that you'd bought some now. When no one knows where the bottom of the market is ... best to buy some, periodicallly, over a substantial period ... though they may go down some more in the short term ... quite likely you'll be pleased with the rate of return on almost all of that series of investments, in three, four or five years. Almost certainly in 10 years. Do you figure on dyin' before that? Do you have some of your assets denominated in currencies of other parts of the world? The reasoning behind the advice that we should diversify our types of investments works here, as well - not a good idea to have all of one's assets in the financial system of only one country. I may think of some more questions later ... but that's about enough for now, ... don't you agree? Good wishes for increasingly skillful management of your income and assets - looking not just to the present, but to the whole term of your life. Maybe even stretching into the lives of your offspring, if you have some. ole joyful P.S. Now at age 80, I have 80% of my assets in equities ... if I kick the bucket next week, there'll be taxes to pay and some monies to be given to charities (and my executor's been told to gift the stocks with the highest level of capital gain to them directly, which provides a receipt for the full value ... and means that I/my estate escapes tax on the capital gain that's been developed over their life. Also ... my kids don't need the money, so won't need to cash the equities for a while ... ... so they can keep on growing, providing increase in the basic value of the equity, even if it fluctuates from time to time ... ... and on annual payout from several of them, which tends to rise, over time, even if it does vary from time to time. o j
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uhh monica if you go back you will see i did say i could lose 1 day but certainly not 2 weeks worth... i also did say that every $$ coming in goes right out plus another $1000 a month, ea month, for the last 24 months, from savings, to cover what student loans do not cover ea semester. DH only gets $6K a semester, tuition runs $4500, books and CAD program rights another $4-5k, mandatory UCF insurance $250, parking $150... he gets nothing for summer so that another $2500 in tuition, $2K in books... all the shortages go on an interest-free credit card and i pay $1000 a month towards that from savings. savings has not be added to at all since 2007 when DH quit working to finish his honors BS/MS and 2 months later i got my income cut 23%. any refunds we get go straight to savings to replenish the losses. sorry if you think i'm not a good citizen lol because i refuse to take on more financial hardship...i have worked since i was 13, had fulltime employment continuously since the age of 18, moved out on my own at 18, put myself thru 10 yrs of college w/o a single loan or any aid, started a 401K at the age of 19, bought my own house, have no credit card debt of my own (dh has the college debt), buy everything needed for my DH, myself and 2 elderly dogs, pay my utilities and mortgage on time and have never ever even had a parking ticket let alone any other offense. not to mention i will never be a burden to society by collecting social security or medicare, as i was raised to believe there will be no $$ left for my generation (X) and i have planned my whole financial life around that. or maybe it's because i'm the child of a 3rd generation chicago political family that you think i'm not a good citizen lol ;-)) ~ liz
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paula_pa
16 years ago
We cut it pretty close. We owed a few times but the past couple of years we worked it out so that we got a small refund.
organic_donna
16 years ago
I would never give the government my money. Last year I owed $500.00 and this year I'm getting back $100.00.
Donna
casey_nfld
16 years ago
We could go on a large shopping spree (we got our refund already) but we are banking it and saving it for a vacation to London England in September.
lydia1959
16 years ago
I like getting the refund back, for me it's like a mini savings account (no interest of course). We've always used the money for home projects - new carpeting, furniture that sort of thing. Now that DD is in college it will pay an entire year of dorm rent.
monica_pa Grieves
16 years ago
No refunds, I pay my taxes at the end of the year...why should they keep my money interest-free?
jannie
16 years ago
Not sure, I haven't prepared our tax return yet. I've been filing electronocally the last 5 years or so.
kframe19
16 years ago
No.

I try very hard to balance what I owe to the Feds with what I Get back from the state.

This year I owe $43 more to the Feds than what Virginia is returning to me.
joyfulguy
Original Author
16 years ago
Like I said ..

... if you're interested in giving out interest-free loans, let me know where the line starts for the hand-out ...

... even if it's only a temporary one!

Some rather interesting discussion of current money management in the U.S. milieu, these days, over on "Household Finance" and "Money Saving Tips" ... even the (rather sleepy) "Retirement" one.

Learning how money works is an interesting hobby ... and, plus taking full charge of yours ... pays well.

Good wishes for increasingly skillful managment of your income and assets.

ole joyful
bulldinkie
16 years ago
No with both our businesses as usual the IRS is getting a sustantial refund check from us.
ruthieg__tx
16 years ago
No refund for us, we paid so much tax this year it was unbelievable. We had stock options in the company my husband worked for and they sold and bought off all the stock holders. We opted to pay the taxes quarterly and just finished up paying the last batch. ...but....we would never leave any amount of money on the table for the government...we would have it so we could invest it.
alisande
16 years ago
Ditto Monica.
grammahony
16 years ago
I haven't had mine figured yet either. I have an appointment on the 28th. I hope I don't have to pay in this year. I did take some money from my investments for my trailer last summer, so that could influence it.
Leslie
Kathsgrdn
16 years ago
I'm getting quite a bit less than I did last year so after I did my taxes I increased my withholdings again, so I will get less next year. I didn't want to increase them too much and then have to pay, so hopefully I'll be closer to $0 this coming year. I'm using my return to pay for a crown (tooth crown) and to pay off bills.
wildchild
16 years ago
We cut it pretty close. Just enough extra so we don't have to pay any taxes.

Next year we will have added income again from rental property but hopefully we'll have enough deductions to balance it out. DD is our accountant/tax person so she'll run the numbers for us.
vannie
16 years ago
I'm having to pay between $7-8,000. b/c TXU sold out. I had no say, b/c I wouldn't have sold it. I hope that's all we owe, but there's probably more.
susan_on
16 years ago
Vannie, OUCH!!
susanjf_gw
16 years ago
we'll get a refund, and then some this year..went from our one and only 6 figure year, to back to reality (dh was laid off) it will be the first time in years we'll be able to claim medical debts, lol...

we've always claimed 0..as mentioned before, it's a way of forced savings for us...

what we do with the check, i havn't decided yet...we do need home repairs...but then retirement is always looming...
kellyleeann
16 years ago
Vannie,
I got you beat!!! The IRS will recieve a nice $10,000.00 refund from me and my husband.
sniff sniff
susan_on
16 years ago
Wowk Kellyleeann, I can't imagine!
whidbeykathy
16 years ago
They are getting the same as from us as Kelly is send them,plus another $1800.00 Would be "nice" if they spent it on education/health instead of a war..Kathy
Toni S
16 years ago
We pay at the end of the ag year, In Feb. It only hurts for a day. No refund, no nothin.
marygailv
16 years ago
I'm retired. I owe to both the state and federal.
kathi_mdgd
16 years ago
We're retired and we already got ours back,over 3000.00.we banked part of it,got new tires for my car,had some plumbing work done etc.
Kathi
liira
16 years ago
I owe $998.00 this year. That's what I get for working a full time and part time job. I did ask my employer of my part time job to take an extra $20.00 per paycheque, but I guess that wasn't enough. I guess the goverment will just keep my GST cheques and knock it off on what I owe them.
Marcia Thornley
16 years ago
I won't get more than $100 back. It's usually the same every year. I don't like the government hanging on to my money. I'd rather bank it myself! I listen to others in the office arranging to have more income tax taken off their cheques each week so that they will receive refunds. Not Me!
I'd rather manage that money myself!
Lillie1441
16 years ago
We have Vannie and Kelly beat.We will be giving the IRS $18,000.! See what I mean about almost enough to buy a new car? LOL Talk about Ouch! All because we were fortunate enough to inherit oil property from in-laws in 81 and were even more fortunate to be able to sell last year at a very good price.We have paid an average of $3000. every year since in taxes on the oil royalties on 2 producing wells,plus about $1200. a year in property taxes.I think it is a little unfair to have to pay 18% taxes on that one time windfall but that's the way it is.So much for being one of those "rich" Texas oil people! LOL
joyfulguy
Original Author
16 years ago
Around here, a number of owners of land also own the mineral rights.

In the Prairie province where I went to University, settled much later (early in the last century) when farmers took over surface rights, it didn't include mineral rights.

Mineral rights continued with the government.

ole joyful

Poll re Income Tax: are you expecting a substantial refund??

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Lillie1441

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Poll re Income Tax: are you expecting a substantial refund??

Comments (29)

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