Comments on: Stop Using Your Tax Refund as a Savings Account

By: Miranda

Miranda — Sun, 31 Jan 2010 17:24:24 +0000

Thanks for pointing that out. What I meant, of course, was the W-4. What a difference a number makes!

By: Ed Collins

Ed Collins — Sun, 31 Jan 2010 05:51:42 +0000

There is an error in the above article. The author wrote, “…They don’t claim all of their exemptions when they fill out their W-2 forms…”

No one “fills out” a W-2 form. The W-2 form is the form you receive at the end of the year, from your employer, which indicates the money you’ve earned, the taxes you’ve paid, etc.

The form the author is referring to, to claim the number of your exemptions, is the W-4 Form!

By: Larry

Larry — Fri, 15 Jan 2010 17:08:22 +0000

I prefer a federal refund because I also always owe my high-tax state a few hundred. Besides, I can’t be certain of my deductions from year to year; sometimes I can itemize very favorably and other times I barely make it or have to take the standard.

By: Holly

Holly — Fri, 15 Jan 2010 02:10:42 +0000

Our tax situation changes from year-to-year…I’d rather play it safe and wait for a refund than find out I owe.

Also, I do my taxes as soon as possible, set it aside, and eventually apply it to my 3 children’s school tuition…the school gives a 5% discount if the tuition is paid in full by Aug. I make more money doing this than I could have in a cd or savings account.

And…that’s why it’s called personal finance.

By: jerry

jerry — Thu, 14 Jan 2010 18:07:37 +0000

I think that most people simply don’t have the self-discipline to save the money themselves, to they are happy to let the government take the lead and use it for a year, and then get it back later. It’s not ideal, and it offers no insurance for them to maximize their own money, but it’s kind of the default decision. Unfortunately.
Jerry

By: Nick

Nick — Wed, 13 Jan 2010 08:43:32 +0000

It’s really easy to rely on money that is coming to you later, but nobody can tell exactly when that money will arrive. If people found a different way to save money instead of waiting on a tax refund, the refund can be a better bonus for something else.

By: Kristoffer

Kristoffer — Tue, 12 Jan 2010 23:23:43 +0000

I work with many, many people that always get excited about how much money they are getting back at tax time. The way they talk about the refund makes it obvious that they really do think the government is “giving” them money as opposed to them getting back money that is theirs.

Most of those people talk about going out and spending it on something they want – flat screen tv’s, computers, down payment on a new car, etc. And it drives me nuts!

If the only way you are going to save is by giving the gov’t a free loan through the year, then fine. But if you don’t have the sense to figure out it’s YOUR money to begin with then you probably aren’t in a good financial place anyway and would piss it away no matter when you got it.

By: Miranda Marquit

Miranda Marquit — Tue, 12 Jan 2010 18:31:27 +0000

Thanks for all the comments! As David points out in the editor’s note, it really is a personal decision. I can see the mental argument for a large tax return, but it really doesn’t do it for me, since I know it’s not actually free money. I guess if I didn’t save any other way, I’d feel better about it. But I’d rather have the interest.

By: Craig

Craig — Tue, 12 Jan 2010 17:27:03 +0000

A few people have mentioned this but I do it more from a mental aspect. The very little money that could be earned from interest is minimal to what it does for me mentally. I would rather have the hopefully decent size lump return check and feel great about it, almost like a bonus that I can use to increase my retirement fund or put toward a future vacation.

By: Calimechengr

Calimechengr — Tue, 12 Jan 2010 17:12:17 +0000

I just graduated college in may and started working in June. When I filled out my W-4, I made sure my withholding would be enough where I could get the most out of my paycheck without having to pay taxes and without receiving a large refund. However, I realized just this week I can claim a credit for the tuition I paid last spring. I will be receiving a large refund this year due to that credit, but all of it will go toward paying student loan debt.