This is a no brainer. Why anyone would want the government to hold onto their money, interest free, for a year, is completely incomprehensible.

Had a coworker that had payroll take out an extra 100 dollars per paycheck to send to the IRS. He was excited to get his six thousand dollar refund so he could pay off his seven thousand dollar visa bill at 20% interest!

quote:

Originally posted by Schmelby:
Had a coworker that had payroll take out an extra 100 dollars per paycheck to send to the IRS. He was excited to get his six thousand dollar refund so he could pay off his seven thousand dollar visa bill at 20% interest!

Haha, exactly!

This is inconsequential for all of us rubes who get between $1000 and $10,000 for a refund.

Getting that $10k (I wish) as a tax refund or paying it in advance would make close to no difference in my life.

quote:

Originally posted by dave7378:

quote:

Originally posted by Schmelby:
Had a coworker that had payroll take out an extra 100 dollars per paycheck to send to the IRS. He was excited to get his six thousand dollar refund so he could pay off his seven thousand dollar visa bill at 20% interest!

Haha, exactly!

My post immediately above assumes, of course, the profile of a sane person. No sane person has thousands in CC debt (heck, any CC debt at all).

You can can believe anything you want but Americans carry a lot of credit card debt. Having “thousands” isn’t even a stretch for most Americans. How do you think the credit card companies can give cash back? You really think they are taking 3% and giving back 1.5-2.5%? They do it on the massive amount of interest they collect. Steady stream of it. Appalling? Oh yea. But so is a thread like this where you actually have some people arguing the OP’s point which of course is correct. Yet some still like Christmas in April. Fml

The idea of giving the US government an interest free loan offends me. I try to organize my affairs to owe as much as possible without being liable for underpayment of estimates.

For some taxpayers, it can be difficult to predict where the line will be between owing and paying. For a lot of folks using the tax tables recommended by the IRS and taking minimal exemptions, the withholding recommendations will be way off. Large swings in income year to year, i.e. capital gains, year end bonuses, commissions, self employment, sale of property etc. and changes in the tax code contribute to the mayhem. And, get the withholding wrong by more than 10% and you're looking at a possible penalty.

quote:

Originally posted by jigray3:
For some taxpayers, it can be difficult to predict where the line will be between owing and paying.

Several years ago I got burned on taxes. I decided to make a spreadsheet that would predict my end of year federal and state tax liability. Fortunately, my tax situation isn't too complicated. I ended up with a spreadsheet with 15 worksheets to track our income, withholding, interest, dividends, capital gains, potential AMT & net investment tax, etc. I update it every month with interest, dividends, etc., adjusting withholding as necessary to get a small refund at year end. It essentially mimics TurboTax. It took me a few weeks to initially set it up and determine all the formulas and embed them in Excel. In my first year, TurboTax validated my Excel model. Previous years data (e.g., % qualified dividends) now helps to predict this years data. Once the new tax rates & deductions come out around November, I will use the 2022 Excel spreadsheet to create the 2023 spreadsheet, update formulas and start planning for 2023.

So far my model has only been off by $1 on either state or federal in the end and I attribute that to number rounding between Excel and TurboTax. I do still file using TurboTax.