Taxes

[Admiral Yi]

Even for people that claim the correct number of exemptions there will usually be a refund.  That's because the withholding system calculates the withholding amount using the assumption that the pay you got in that period is 1/26 (or 1/52) the amount you will earn the entire year.

So if you kick out the jams and double your regular paycheck one period with overtime, the amount withheld is how much tax you would have to pay if you doubled your income for the year.

[merithyn]

Am I right in saying all USAnians have to do their own self-assessment whatever their employment status?* And it's mroe commmon to get a rebate than to have more to pay? Here it's usually only if you're self-employed, and pay as you earn (PAYE) does for the rest of us, with little hope of rebates.

* I learnt this mainly from The Simpsons.

Who has to file a tax return?

It's $9750 for single, childless people.

As for rebates, yeah, most people get one but that's because they have more taxes taken out of their paycheck in a year than they owe in taxes. Usually, that's because of the tax breaks, etc., that is really hard to account for when you fill out the form at the start of the year telling the employer how much to deduct from each paycheck.

[garbon]

second, people tend to use their refund check to pay for their vacation or otherwise treat themselves in some way--it's kind of looked at as a form of found money.

Which is retarded.

Back when interests rates were better, it was doubly so, as you'd basically be letting the government earn the interest on the money you overpaid.

[merithyn]

second, people tend to use their refund check to pay for their vacation or otherwise treat themselves in some way--it's kind of looked at as a form of found money.

Which is retarded.

Why? It's a dedicated way to save money. And it's not like putting it in a savings account makes you much. At least this way, you know that you can't touch it until the next year.

We're planning a trip to Europe with the youngest two kids next year. I'm considering changing my exemptions to zero to have them take a good chunk of money out of my account so that when we go, we'll have a nice bit of cash to go with us. It's win-win so far as I can tell.

[merithyn]

second, people tend to use their refund check to pay for their vacation or otherwise treat themselves in some way--it's kind of looked at as a form of found money.

Which is retarded.

Back when interests rates were better, it was doubly so, as you'd basically be letting the government earn the interest on the money you overpaid.

A savings account interest rate is 0.1%. Hardly worth it.

[garbon]

second, people tend to use their refund check to pay for their vacation or otherwise treat themselves in some way--it's kind of looked at as a form of found money.

Which is retarded.

Back when interests rates were better, it was doubly so, as you'd basically be letting the government earn the interest on the money you overpaid.

A savings account interest rate is 0.1%. Hardly worth it.

Did you actually read my full post or just the end of it?

[dps]

second, people tend to use their refund check to pay for their vacation or otherwise treat themselves in some way--it's kind of looked at as a form of found money.

Which is retarded.

Back when interests rates were better, it was doubly so, as you'd basically be letting the government earn the interest on the money you overpaid.

A savings account interest rate is 0.1%. Hardly worth it.

There are other ways to invest money, you know.

In strictly economic terms, Valmy is right--it's a retarded way to save money.  In practical terms, it's the only way a lot of people will save up enough to actually go anywhere on their vacation.

[merithyn]

Did you actually read my full post or just the end of it?

I read it, but I don't think that it's worth it for the individual. Yes, the government gets that interest rate, which for them is quite a bit. However, for the individual only letting a few thousand ride, it's really not. And again, it guarantees that the money can't be touched for at least a year.

I can hardly remember when savings interest rates were worthwhile, so from my perspective, they're no different than hiding your money under your mattress. So I don't see having them take extra taxes out to get back at the end of the year as a bad thing.

[Admiral Yi]

Incidentally Iowa ended the year with a surplus and the governor (God bless his soul) has proposed mailing a refund check to everyone.

Democrats in the legislature of course want to "invest" the money in crucial social spending.

[merithyn]

There are other ways to invest money, you know.

In strictly economic terms, Valmy is right--it's a retarded way to save money.  In practical terms, it's the only way a lot of people will save up enough to actually go anywhere on their vacation.

Sure, but you have to have a set amount to make any of those worthwhile, too. Once you've saved up $1000, buying a CD or some stocks makes sense, but you have to get to that point. For someone like me, that's 20 months worth of saving. Why not have the gov't hold on to the money for the year, and then when you get it back, buy the CD then?

When you have the money to save more than a pittance each paycheck, it doesn't make sense to let the gov't have it. I'm not in that position.

[merithyn]

Incidentally Iowa ended the year with a surplus and the governor (God bless his soul) has proposed mailing a refund check to everyone.

Democrats in the legislature of course want to "invest" the money in crucial social spending.

Like education and infrastructure? Yes, that would be awful.

[Ed Anger]

I'd rather have the check. Daddy wants some more wargames to fondle and put on the shelf.

[Valmy]

Why? It's a dedicated way to save money.

It seems to me like it puts you in peril of having to go into debt because a large chunk of your paycheck is sitting in government coffers.  I would rather save money without that kind of risk.

[Admiral Yi]

Meri, I agree that the very low current interest rates make it not that profitable to fine tune your withholding.  But by the same token most people who are not smoking crack cocaine on a daily basis do manage to put aside money on a regular basis to save up for a big future expenditure.

[Valmy]

Incidentally Iowa ended the year with a surplus and the governor (God bless his soul) has proposed mailing a refund check to everyone.

Democrats in the legislature of course want to "invest" the money in crucial social spending.

Well I guess it depends on what the condition of the state's finances are in.  It may make sense to save the money if deficits are common, just to be safe.  Or if there are critical infrastructure projects that need funding.  Probably neither are the case in Iowa though.