It has been said here before, more than once, but it's that time of the year again, so I'll repeat it.

Tax RETURN: The form(s) that you file with the IRS, to determine your tax liability for the previous fiscal year. This term is frequently used, improperly, to denote a tax refund.

Tax REFUND: The money that you get back from the IRS if your tax deposits during the preceding year exceeded your tax liability.

I'll have to have my CPA review your post and get back to me on what it all means.

quote:

Tax REFUND: The money that you unwisely lent to the feral government and now the IRS is returning to you without paying any interest. get back from the IRS if your tax deposits during the preceding year exceeded your tax liability.

FIFY

todd -- what you posted is true in the vast majority of cases, but there are exceptions. I can cite an exception, it happened to me.

I was working at a good pay rate. I had calculated withholding so that I would owe a small amount at tax time. So far, so good. Then, the project got canceled, I was "down-sized" out of a job, and had very little income for the rest of the year. What had been withheld would have been just right, IF the job had continued for a full year, but it was way overpayment for taxes when a partial year's income unexpectedly became the total income for the year. I received a substantial refund.

I can honestly say that I have never seen the terms used incorrectly .

Tax Return - alternate meaning as used by millions of workers: seemingly free money gifted by the IRS to the worker. Sometimes it really is free money if they get refundable tax credits, which many do.

The lack of understanding of the basics by so many citizens is astounding and worrisome.

My favorite is how giddy people get. They act like it is a bonus check with only one purpose, to be spent as quickly and frivolously as possible. Ugh.

My dad always told me to set up my withholding to result in a small payment every year. He wasn't wrong.

IRS & Taxes = BOHICA = Bend Over Here It Comes Again
.

quote:

Originally posted by V-Tail:
It has been said here before, more than once, but it's that time of the year again, so I'll repeat it.

Tax RETURN: The form(s) that you file with the IRS, to determine your tax liability for the previous fiscal year. This term is frequently used, improperly, to denote a tax refund.

Tax REFUND: The money that you might get back someday from the IRS if your tax deposits during a preceding year exceeded your tax liability.

Had to edit due to personal experience

I always plan to owe. The one year I didn’t…

Return - Filing is inevitable, if you don't want a court date.

Refund: a rare item

quote:

Originally posted by scratchy:
<snip>
Refund: a rare item

My tax guy sets my quarterly payments so that I never get a refund. I always have to pay a small (sub-penalty) amount. He aims to get me “based”, to use his term. My P4 payment is tweaked to assure that. No sense giving Uncle Sugar an interest-free loan.

I’ve heard that refunds are coming slowly nowadays.

I got to the point when I was working to manage a small refund every year in the range of a couple of thousands. I didn't want to be bothered with the task of trying to find where to pull the money from.

Now, I have a lot of control to determine how much money I can realize as income way before the year ends and I pay my taxes pretty close to the nearest dollar.

I get that a large refund is just an interest-free loan you gave to the government, but I'd still rather have my withholding such that I get a two- or three-figure refund. A miscalculation once left me owing $1400. In 2011 this was a very bad time for me to have to come up with this amount. But I made several token payments, with the remainder coming from my 2012 refund. All was well after that, but I have never forgotten it.

quote:

Originally posted by egregore:
but I'd still rather have my withholding such that I get a two- or three-figure refund

This is also what I try to do; just a small amount back. I would prefer to get this rather than having .gov pull money from my bank account or sending a check through the mail these days.

Several years ago, after getting a surprise year-end tax liability, I modeled TurboTax using Excel for my particular tax situation. Last year I was off by one or two dollars on both my federal and state taxes. After submitting my tax returns, I put TurboTax's numbers in the spreadsheet to validate and, if necessary, tweak the model. The underlying numbers, e.g., tax rate schedules, standard deductions, etc., require updating each year along with monthly inputs to income, interest and dividends. I change FITW & SITW along the way to maintain that two- or three-figure refund.

quote:

Originally posted by egregore:
I'd still rather have my withholding such that I get a two- or three-figure refund.

Same. I typically get a couple hundred back from federal and state.

quote:

Originally posted by Pipe Smoker:
I’ve heard that refunds are coming slowly nowadays.

That hasn't been my experience. Always deposited in my bank account within ~2 weeks of filing.

But probably slower for those who insist on a paper check, and who wait until the very last minute in April to file.

quote:

Originally posted by RogueJSK:
That hasn't been my experience. Always deposited in my bank account within ~2 weeks of filing.

Same here. Small fed refund back in 2-3 weeks (electronic filing w/TurboTax) and about 6-8 weeks for state - I mail their return as it's much cheaper than paying TurboTax to e-file it; certified mail.

quote:

I’ve heard that refunds are coming slowly nowadays.

I've heard that every year at least since Obasm's election. But I have never had a direct deposit take more than ~8 business days from the day of filing.

My BIL thinks he is a financial whiz, but he isn't.
He LOVES to brag about his 5 figure tax "return" saying his tax guy is a genius. I tried explaining to him it was "his money" that he lent to the government via overpaying tax withholding and getting it back as an interest free loan to them but it was a waste of time LOL. He is a great guy though.

Also at work my wife's coworkers bitch about how they pay more taxes on bonus and overtime pay. I explained to wife that they don't but that the employer may withhold taxes at a higher rate as most everyone hates to owe taxes on their return and will gripe to payroll dept about that. She explained to a another financial wiz coworker what I said and she told my wife I was dead wrong. My response was to ask her where in the tax code does it show that bonus and overtime income is taxed at a higher rate than regular income and does she want to bet me about my statement. Never heard back from her over that.

There are different federal rules that employers have to follow about bonus withholdings, so it's understandable why some folks would think that bonuses are actually taxed at a higher rate.

The first $1M in bonuses and other supplemental income are withheld at a 22% tax rate. So if someone is in the 12% tax bracket, then having nearly double the expected taxes withheld out of a bonus could cause frustration. However, since actual tax due come tax season is based off your overall total income, then they'll potentially get some or all of that 10% excess withholding on the bonus back as a refund once they file their return.