Sunday, January 27, 2008

Tax pet peeve

I've been reading some message boards/comment threads lately, and one thing keeps popping up over and over that drives me nuts. Allow me define a few terms for the less-informed:

1. Tax RETURN - The paper or online form you fill out. This is not a check.

2. Tax REFUND - Money given back to you by the government because you overpaid your taxes during the year. If this is more than like $500, you're doing it wrong. Ours was $14.

3. Tax REBATE - Money given back to you by the government out of the portion you actually did owe (i.e. not in excess).


Oh, and two other things - first, I also keep hearing people complain about "people who don't pay any taxes" also getting a $300 rebate. This is a misnomer - you have to have at least $3000 of income to qualify for a rebate, and while people making that little money certainly don't pay income taxes, they *do* pay Social Security and Medicaid taxes. So just think of it as a payroll tax rebate, if it makes you feel better. Our generation isn't going to see most of the payroll tax money we're paying anyways.

Second: to the person that claimed that if we don't go out and spend our rebate check, we are "stealing from the government" - DIAF. But not before you send me your rebate check. I'll gladly spend it for you :-)

Actually, one more thing. You are not going to get a rebate check in time to bet it on the Super Bowl, or pay your 2007 tax bill, or your heating bill for this winter. Stop being an uninformed sheep. If you can't even educate yourself about the basic details (pick up a paper! go to your library and read!) then I think you also ought to forfeit your me.

Thank you.


You Make Me Peeved said...

Hey, guess what? You're wrong and you sound pretentious.

I, and many other people I know, intentionally have more deductions taken out of my paycheck than necessary. My personal reason is that I find this an easy way to save a chunk of change until I get a tax refund in the spring, at which point it will go straight into savings.

Do what you want and say what you want, but I thought you'd like to know that you sound like a moron when you post things like "Tax REFUND - Money given back to you by the government because you overpaid your taxes during the year. If this is more than like $500, you're doing it wrong."

Cheerio old chap.

Matt Silverthorn said...

Just because you do it that way because you're lazy doesn't make you right. What you are doing basically amounts to giving the government an interest-free loan. You could be sticking that money in a savings account yourself and earning interest on it, but instead you're posting anonymous comments on blogs proving your ignorance.

Cheerio O Intelligent One

Courtney said...

Thank you, visitor #11,555! I appreciate your comment. And while your extraneous tax dollars have been paying interest to China or buying $4,000 toilet seats, mine have been paying off debt and earning interest in a savings account.

And no, I am not "wrong," as any personal finance blog or article will tell you to do the same thing. It's not like I'm some financial genius pulling things out of my brilliant brain.

It's really pretty simple to remedy your situation, in like 5 minutes.

1. Divide last year's refund by 12. This is roughly the amount you could be bringing home every month. For the "average" refund at H&R Block, this is $200.

2. Go to your payroll office and request Form W-4. Increase your exemptions. When we fixed ours, each exemption netted us an additional $25 per paycheck. YMMV.

3. See how much your paycheck changes. Tell your savings account to automatically debit your checking account for that much each pay period. Wouldn't it be nicer if you took your money out instead of Uncle Sam?

4. Lather, rinse, repeat if necessary.

The "average" person just earned him/herself a cool $90 or so each year, on top of being able to use their dollars as they see fit throughout the year. Plus, as Albert Einstein said, the greatest force in the universe is compounding interest. Use it. Make it your friend. Seriously, do it for the kids.

Nice blog :-)