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Yes and no. For many of John Q Public, it's forced savings which is never a bad thing. I'd rather get a small refund of a few hundred dollars, than have to write a check. But you're right - the best option in theory is if you have to write a small check.
Actually, the best option in theory is to have to write as large a check as possible without having to pay an underpayment of estimated tax penalty.
This is an example of the pervasiveness of financial illiteracy in our society. These people claim they did not get a tax cut... well, they did, in terms of a bigger paycheck. If they noticed a much bigger paycheck why did they not save that extra money? These ignoramuses are equating a refund to how much they are taxed, when one does not know how to do basic math that is how it is I assume
How would they not know this? Even as a young, naive person just starting out in the workforce, I knew that.
Maybe these are the same people who think they shouldn't have to pay back student loans.
I've owed taxes several times over the years and never had to pay any interest or penalties. Are you sure you don't mean if you are late paying when due?
For brevity I didn't mention that there are two "safe harbor" provisions that allow you to go interest-free (which I am assuming you fall under), but most taxpayers with steady incomes will owe interest and penalties even if they meet the filing deadline unless they owe less than $1000.
No, the best practice is to first understand the simple IRS rules about the withholding/estimated taxes compared to tax liability, and to then make sure that the amount withheld or paid is within the safe harbor described in those rules. I've never incurred a payment penalty and haven't received a refund in the last couple of decades.
Well, if you are very efficient at computing the estimates then I suppose that might be so, but for most American workers (who are neither knowledgeable in the rules nor good at math), the opportunity cost of the time it takes to figure that out is more than the interest you would lose by just getting more money withheld from your check.
well, it is technically better to owe money than to get a refund. A refund is your own money coming back to you that you loaned freely to the government. It's a bad idea. At a minimum you could've taken that money and put in high yield savings and got a few bucks interest. $2000 at 2% is 40 bucks, may not be much but you can go and have a nice dinner with it instead of donating it to Uncle Sam.
Also, these people act like it's free money that they are "relying" on... which is ridiculous. It's money that they already earned that's being returned to them. It's not a grant from the government. Whether they get it upfront or in the end makes no difference whatsoever which makes them financially ignorant.
most people would prefer to get $2k back at tax time instead of an extra $75 per paycheck.
I'm happy that I don't owe $10k like last year, but the $5k I owe this year will hurt too and my wife and I did adjust our W4.
Our tax refund is less than last year - but that's a good thing! I'm self-employed, and have been trying to get it down to a 3 figure refund for years. We're getting back just over $1000 so I was not successful this year, but I really hate the idea of writing a 5th check to the IRS (my 4 estimated payments are plenty in my opinion).
I thought we'd save about $3000 under the new tax law and it turns out I was wrong - we saved $4000! I, for one, am a big fan of the TCJA.
The reality is our deficit has been pretty transparent to most Americans all our lives and it likely will continue...
I agree. People say they care, but they really don't. They think someone else's benefit should cut and/or someone else's taxes should be raised (besides theirs).
Quote:
Originally Posted by mathjak107
The thought that i am paying less in tax rates 40 years later says as long as the world buys our debt, no one notices this debt in our daily lives ..
The problem with debt is it isn't a problem....until it is...and it can change on a dime. Just look at what happened in Greece.
Quote:
Originally Posted by mathjak107
I got better things to worry about since i have no control over this ...
I agree on the no control issue. But it is worrying. It's why I think there will be a financial collapse in my lifetime that will make 2008 look like a walk in the park.
....Still playing the money game, but making alternative plans.
growing up in the cold war we were all convinced we would never make it to older ages because we would have a nuclear war ...surprise , 45 years later here i am ...
life in the 1970's when i entered the work force looked like inflation had no where to go but up and gold was the only investment worth making ---surprise!!!!!! inflation has been tame , interest rates fell for decades and my taxes were at the lowest rates in my history of working ...surprise again ....,
rarely does what we all think and see play out no matter how obvious the outcome appears ...
but my financial plan does not rule out uncertainty , it plans for it and allows for it now .
Our tax refund is less than last year - but that's a good thing! I'm self-employed, and have been trying to get it down to a 3 figure refund for years. We're getting back just over $1000 so I was not successful this year, but I really hate the idea of writing a 5th check to the IRS (my 4 estimated payments are plenty in my opinion).
I thought we'd save about $3000 under the new tax law and it turns out I was wrong - we saved $4000! I, for one, am a big fan of the TCJA.
Darn Someone who completely understands how much she pays and tries to maximize the profit from her labor.
most people would prefer to get $2k back at tax time instead of an extra $75 per paycheck.
I'm happy that I don't owe $10k like last year, but the $5k I owe this year will hurt too and my wife and I did adjust our W4.
Possibly. But the problem is when most people would rather get $2k back than $100 per paycheck. In other words, they are worse off in the net. Dumb, dumb, dumb.
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Someone who completely understands how much she pays and tries to maximize the profit from her labor.
