How Much of Tax Refund Do You Save/Spend..??

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Cautious Optimist
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How Much of Tax Refund Do You Save/Spend..??

Post by Cautious Optimist » Sun Mar 02, 2014 9:13 am

I'm happy to be getting a refund but disappointed I can't invest it all.

- About 35% will be invested (replenishing EF)
- About 50% is paying costs of a professional conference slash mini-getaway (conference, airfare, hotel, expenses)
- The remainder will be spent on stuff I need (shoes, clothes, etc.)

For those getting a refund how will you allocate it in terms of saving and spending/paying debt..??

(For those who owe, sorry)

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prudent
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by prudent » Sun Mar 02, 2014 9:16 am

I've never been good at tweaking withholding to end up at a near break-even point, so I do end up with a refund. I don't allocate it to anything in particular, it all goes into savings.

Sidney
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Sidney » Sun Mar 02, 2014 9:17 am

Cautious Optimist wrote:- About 35% will be invested (replenishing EF)
How much would this be worth had you not over withheld?
I always wanted to be a procrastinator.

crowd79
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by crowd79 » Sun Mar 02, 2014 9:22 am

I'll use this year's refund ($3,170) to pay for my recent vacation to Costa Rica....

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cfs
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by cfs » Sun Mar 02, 2014 9:28 am

Leaders, good morning/afternoon/evening

Good conversation.

The few times we have received a refund we have saved/invested all. Now, I can't remember the last time our family received a refund, that happened too many moons ago.

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~

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BTDT
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by BTDT » Sun Mar 02, 2014 9:33 am

I honestly can't remember the last time I received a significant refund. I have considered overpaying, so I could purchase a $5K Ibond, but I just cant bring my self to give uncle Sam an interest free loan :oops:
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runner9
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by runner9 » Sun Mar 02, 2014 9:37 am

We just treat it like a normal pay, which is into savings, with extra at the end of the month to the mortgage. $203 this year, we owed last year.

crowd79
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by crowd79 » Sun Mar 02, 2014 9:45 am

jvclark02 wrote:I honestly can't remember the last time I received a significant refund. I have considered overpaying, so I could purchase a $5K Ibond, but I just cant bring my self to give uncle Sam an interest free loan :oops:
With interest rates on savings so low, generally less than 1%, I don't mind overwithholding for now. So I lose maybe $20 bucks, or about $15 after taxes. I look at it as forced savings and money that if I otherwise had, I would probably end up spending it. I look forward to the yearly refunds while interest rates are so low.

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avenger
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by avenger » Sun Mar 02, 2014 9:46 am

Not a big refund (relative to income), but every cent going toward debt reduction.
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englishgirl
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by englishgirl » Sun Mar 02, 2014 10:01 am

I haven't finished my taxes yet, but I think that I will get a refund this year. Last year I owed, and made estimated tax payments this year, but my income dropped so I think I pretty much get the estimated payments back again. It's all already mentally spent - there are some home repair/improvement projects I have been putting it off that I will gladly put a tax refund to. If the two projects that are most urgent miraculously don't take all of the refund (actually, I expect that to do them both will be more than I think I will get back), then I'd put extra into my EF.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by KyleAAA » Sun Mar 02, 2014 10:04 am

This year, I'll probably spend most of it on a vacation to Thailand.

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by gkaplan » Sun Mar 02, 2014 10:09 am

I plan to use my refunds toward a down payment for a condo, as I tiptoe through the perils of home ownership after having been a lifelong renter.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by jebmke » Sun Mar 02, 2014 10:19 am

I will probably spend 100% of it on a bottle of wine.
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pennstater2005
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by pennstater2005 » Sun Mar 02, 2014 10:25 am

I'll save mine, I mean ours.
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midareff
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by midareff » Sun Mar 02, 2014 10:27 am

I self-escrow for the IRS, property tax and condo and car insurance within an Ally MM account which is also an emergency catch all account kept at 3-4% of portfolio (I'm retired). When the account is over a certain threshold the overage is used for trip :wink: money. I try and project all of them a year in advance and monthly escrow what is needed + a margin for error. IRS refunds go back in.

EDIT NOTE: I use the IRS EFTPS system and use Turbo Tax Estimates near the end of the year to adjust the last payment (January 15th) to keep the overage as close to zero as I can practically get it.

placeholder
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by placeholder » Sun Mar 02, 2014 10:34 am

Money is fungible so I won't treat this any differently so any refund will go into the bank and be used or invested as the need arises.

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by sscritic » Sun Mar 02, 2014 10:37 am

placeholder wrote:Money is fungible so I won't treat this any differently so any refund will go into the bank and be used or invested as the need arises.
Exactly. Mine goes into my checking account, as does my social security and my pension. When I buy groceries, which money did I spend? I know, I spent my tax refund on groceries. Now it is up to you to have faith and believe.

poker27
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by poker27 » Sun Mar 02, 2014 10:47 am

I will probably invest the bulk this year. I have some lofty saving goals for 2014, will probably need every penny I can find to meet.

heyyou
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by heyyou » Sun Mar 02, 2014 10:49 am

In my twenties, I thought it was free money. That was 40 years ago.
placeholder wrote:Money is fungible so I won't treat this any differently

Onyxmeth
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Onyxmeth » Sun Mar 02, 2014 11:03 am

I save all of it or it pays down debt. I got a sizable refund accidentally. I took the correct amount of deductions, but my credits added up to too much. I might take an extra deduction on my W4 this year to balance it out. The refund is a little over $1300. I'll use it to get a jump start on next year's Roth, or put it in the vacation fund and shorten my monthly contribution.

Mike Scott
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Mike Scott » Sun Mar 02, 2014 11:03 am

It's not a big refund but it will be 100% invested until I need to spend it.

crg11
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by crg11 » Sun Mar 02, 2014 11:07 am

Well, this year I ended up owing a couple hundred bucks, so no refund to spend.

Normally, I use it towards debt reduction.

92irish
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by 92irish » Sun Mar 02, 2014 11:21 am

This thread reminds me of one of my favorite words...."intaxification." Defined as the euforia one feels on the receipt of a tax refund, only to be followed by the hangover of realizing it was your money to begin with.

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Zabar
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Zabar » Sun Mar 02, 2014 12:09 pm

92irish wrote:This thread reminds me of one of my favorite words...."intaxification." Defined as the euforia one feels on the receipt of a tax refund, only to be followed by the hangover of realizing it was your money to begin with.
Love it!

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Clever_Username » Sun Mar 02, 2014 12:14 pm

I'm getting $1500 back. Consequences of five income streams -- I didn't get withholding just right. Hopefully I'll get less from my 2014 taxes.

It's all going into my portfolio as per my AA.
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tuningfork
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by tuningfork » Sun Mar 02, 2014 12:15 pm

My 2013 tax refund will go toward my first quarter 2014 estimated tax payment.

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by scrabbler1 » Sun Mar 02, 2014 12:21 pm

Because I have no taxes withheld any more (not since 2008 when I early retired), I never overpay my estimated taxes just to get a refund. Before that, I still rarely ever got a refund because of my investment income which had zero taxes withheld.

About 10 years ago I had accidentally erred in a pair of estimated tax payments to my home state (NY) and the state I worked in (NJ) and filed a non-resident tax return. I paid NY too much and NJ too little which had me owing more than I expected to NJ and getting a refund from NY On the federal side, I last got a refund for my 2001 taxes because my investment income was nearly nothing following a bad year in the markets. But the same week I got the federal refund, I wrote a check to NY to pay some taxes owed. Those amounts were nearly the same (just under $200) so for me that is where the federal refund went.

dpusa
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by dpusa » Sun Mar 02, 2014 1:11 pm

Ok, I am a little envious :(
I am in a salaried job, but my spouse and I owe just under $6k. Looking to start withholding more taxes after half of 2014!

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by pjstack » Sun Mar 02, 2014 1:16 pm

Some paper I-Bonds.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Twins Fan » Sun Mar 02, 2014 1:20 pm

My refund this year is going toward building the emergency fund back up, after having to replace the roof last year. No sexy investing or spending for me. :D

Next year, or for this tax year, I'm hoping to get no or a very minimal tax return. I have received fairly large returns the past couple years and now made some adjustments so the gov't doesn't hold my money for me until March. :oops:

island
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by island » Sun Mar 02, 2014 1:38 pm

92irish wrote:This thread reminds me of one of my favorite words...."intaxification." Defined as the euforia one feels on the receipt of a tax refund, only to be followed by the hangover of realizing it was your money to begin with.
Funny, I'm so stealing that word! :greedy

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Grasshopper » Sun Mar 02, 2014 1:50 pm

EFTPS out of Vanguard MM, direct deposit in, simple.

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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Jack FFR1846 » Sun Mar 02, 2014 2:02 pm

This year, I'm getting an iBond with some of my fed refund. I think the remaining amount will go to snowmobile repairs.

One year in particular, everything lined up and we bought a boat. Right around the beginning of March, I received my quarterly bonus, yearly profit sharing, a bounty for bringing someone into the company, a patent filing award and my tax refund.

4 years later, I sold the boat to regain half of my original purchase. We figured out that my family isn't really a boat family.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by travellight » Sun Mar 02, 2014 2:18 pm

My overpayment just goes to reduce my payment due for that quarter so I never see any money back. I can't imagine spending my tax refund.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by mcblum » Sun Mar 02, 2014 2:22 pm

we overpaid on the taxes when we converted a TIRA to Roth, so we are getting back a large amount. I split it with my wife and will use my share to pay off car note about 18 months early.
Marty

dad2000
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by dad2000 » Sun Mar 02, 2014 2:24 pm

I try not to over-withhold, so if I get a refund, it amounts to <1% of my income. It gets deposited in the checking account to pay bills. Nothing special.

ericvt
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by ericvt » Sun Mar 02, 2014 2:25 pm

My refund this year was fairly large due to overpaying social security (switched jobs midway through the year in 2013).

It will be used to pay for my sister's tuition for summer college classes.

In that sense I guess it is an investment of sorts, though someone else will be enjoying the returns :happy

If I were to keep it for myself it would be 100% invested.

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NightOwl
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by NightOwl » Sun Mar 02, 2014 2:27 pm

I created a $5,000 refund so that I could spend it on $5,000 of paper I bonds.

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jojay
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by jojay » Sun Mar 02, 2014 2:30 pm

We have 3 kids in college.
Guess where the refund is going.

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Raymond
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Raymond » Sun Mar 02, 2014 2:31 pm

Our refund (plus a little extra to max out) went into this year's IRAs.
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HomerJ
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by HomerJ » Sun Mar 02, 2014 2:53 pm

We pay every year. Never get a refund...

One of my favorite scenes from the movies comes from "Date Night" (a REALLY bad movie other than the scene I'm about to describe)

Two 20-somethings getting their taxes done

Accountant: You'll be getting a $2000 return this year. You might want to consider opening an IRA. Investing that money conservatively over the next 30 years could really make a big difference for your retirement.
Girl 20-something: Or we could go to Cancun, and have sex on the beach!
Guy 20-something: I choose that.

:D

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dratkinson
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by dratkinson » Sun Mar 02, 2014 3:12 pm

I bonds.

I did a draft fed return to know how much money to send in with my extension.
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montanagirl
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by montanagirl » Sun Mar 02, 2014 4:17 pm

Ours goes straight to the property tax fund. Tax refund goes to first half, and I save up some of my side money for the second half.

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SpringMan
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by SpringMan » Sun Mar 02, 2014 5:04 pm

What is a tax refund? :) I have been converting $20K per year from tIRA to Roth IRA with no withholding in the amount converted. Bumped other withholding on SS and pension to compensate but apparently not enough. Close though, only owe about a grand to the IRS.
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by bertilak » Sun Mar 02, 2014 5:09 pm

Well, what would you have spent it on if it wasn't withheld to begin with? The IRS just borrowed it from you for a while and didn't even pay you any interest.
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kingsnake
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by kingsnake » Sun Mar 02, 2014 5:31 pm

I bonds
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Grt2bOutdoors
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by Grt2bOutdoors » Sun Mar 02, 2014 5:50 pm

What tax refund? I prefer not to give an interest free loan to anyone, including Uncle Sam.
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mickeyd
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by mickeyd » Sun Mar 02, 2014 6:03 pm

I stuck my $3K federal tax refund in my Ally online savings to be spent later on in the year.
Last edited by mickeyd on Sun Mar 02, 2014 7:26 pm, edited 1 time in total.
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manwithnoname
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by manwithnoname » Sun Mar 02, 2014 6:04 pm

Why would I want a refund? A refund means there was something wrong with my tax planning which needs to be corrected.

Refunds are for taxpayers who cannot figure out how the tax law works.

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mickeyd
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Re: How Much of Tax Refund Do You Save/Spend..??

Post by mickeyd » Sun Mar 02, 2014 7:29 pm

manwithnoname wrote:Why would I want a refund? A refund means there was something wrong with my tax planning which needs to be corrected.

Refunds are for taxpayers who cannot figure out how the tax law works.

I used to say that too, but when they insist on sending you money it's difficult to turn down.
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