Your tax withholding strategy

[Dayze]

I recently (August '12) had a significant bump up in pay;
I don't have any itemized deductions; so I need to remove my standard deduction from our gross income, and determine wha the taxable piece is - then compare to our current witholdings.

We're gonig to need to really adjust our 401k contributions to lower the taxable income (which is a good thing!). I want to be as close to 0 as possible in terms of a return

[Dayze]

holy shit.

yeah....CPA route lol. That's insane

[DaKCMan AP]

Still waiting on some 1098 & 1099 forms, but I thought I was going to owe ~$50 this year but now it looks like I'll be getting a nice refund.

Didn't expect to get a tuition & fees deduction and I guess the IRS withholding calculator didn't properly adjust my taxable income due to pre-tax contributions to retirement & health accounts.

[alnorth]

Every January I reset back to the typical default withholding and don't think about it till October. In October I take a close look at what I've withheld and what I'll likely owe, then I adjust for the rest of the year.

I get the best of both worlds. The government does not get an interest-free loan, and I basically get a 3-month "bonus" during the holiday season when people sometimes need more money anyway.

Stop getting those huge refunds, give yourself a 3-month pay-raise at the end of every year instead.

[rageeumr]

I usually make pretty sound, logical financial decisions. This is the exception. I know it makes zero sense, but I like getting a big return.

[Mr. Plow]

We generally don't go out of our way to overpay, but we always do and get a decent return each year. I like getting the return because we almost always use the money on something that we've needed but didn't have the money for, or a trip, etc.

[The Franchise]

Originally Posted by Mr. Plow

We generally don't go out of our way to overpay, but we always do and get a decent return each year. I like getting the return because we almost always use the money on something that we've needed but didn't have the money for, or a trip, etc.

This.

It helps after buying a house because we can take that money and put it back into the house.

[Mr. Plow]

Originally Posted by Pestilence

This.

It helps after buying a house because we can take that money and put it back into the house.

Yup.

Let's see.....this year any return goes to finishing the basement or a damn fence for our backyard. Or a new bed.....**** we need a new bed.

[The Franchise]

Originally Posted by Mr. Plow

Yup.

Let's see.....this year any return goes to finishing the basement or a damn fence for our backyard. Or a new bed.....**** we need a new bed.

I think we're going to get hardwood floors in the kitchen and living rooms.

[Mr. Plow]

Originally Posted by Pestilence

I think we're going to get hardwood floors in the kitchen and living rooms.

Nice!

[Buehler445]

Originally Posted by Mr. Plow

We generally don't go out of our way to overpay, but we always do and get a decent return each year. I like getting the return because we almost always use the money on something that we've needed but didn't have the money for, or a trip, etc.

I'm not trying to be an ass, but why don't you do it yourself. I recognize the thrill of getting a big check. I also recognize that it is tough to save the money.

But I can't get on board with this type of saving. If you are a monthly paycheck guy, you can do the same thing. If you got $6000 return, just adjust your withholdings to get that money coming your way and then just set up a direct deposit to a savings. $6000 is serious money. $100 may not be worth jacking with but $6000? Wow.

If you NEED the money, you could have access to it. Kid gets sick, water heater blows up, car wreck, that type of thing, you can have access to the money. Even if it happened November-December, waiting till march-April would suck. You could theortetically borrow against it but then you have application fees and interest. I know the thought of .25% interest is not exciting at all. But NOT having access to $6000 is nowhere near worth seeing a big deposit come through.

[Mr. Plow]

Originally Posted by Buehler445

I'm not trying to be an ass, but why don't you do it yourself. I recognize the thrill of getting a big check. I also recognize that it is tough to save the money.

But I can't get on board with this type of saving. If you are a monthly paycheck guy, you can do the same thing. If you got $6000 return, just adjust your withholdings to get that money coming your way and then just set up a direct deposit to a savings. $6000 is serious money. $100 may not be worth jacking with but $6000? Wow.

If you NEED the money, you could have access to it. Kid gets sick, water heater blows up, car wreck, that type of thing, you can have access to the money. Even if it happened November-December, waiting till march-April would suck. You could theortetically borrow against it but then you have application fees and interest. I know the thought of .25% interest is not exciting at all. But NOT having access to $6000 is nowhere near worth seeing a big deposit come through.

Oh, I understand. But take into acct like Pest that we had huge deductions for child care, etc. I'm the type of person that I balance my spending around what I have - regardless of the amount.

Yeah, having an extra $200/paycheck would be nice, but I find that I get more done with a return than I would with a little bit of extra money per paycheck. Ideally I'd like to be in the $1,000 range - I'll never try to get even or even owe anything.

This year should be a good indicator of where we are - it will be the first year without any daycare, etc.

[Buehler445]

Originally Posted by Mr. Plow

Oh, I understand. But take into acct like Pest that we had huge deductions for child care, etc. I'm the type of person that I balance my spending around what I have - regardless of the amount.

Yeah, having an extra $200/paycheck would be nice, but I find that I get more done with a return than I would with a little bit of extra money per paycheck. Ideally I'd like to be in the $1,000 range - I'll never try to get even or even owe anything.

This year should be a good indicator of where we are - it will be the first year without any daycare, etc.

I recognize the inclination to spend it if you hae it, but sock it away in a savings account and don't look at it.

[The Franchise]

Well and my wife doesn't pay state taxes....so I get to claim all of that for my state taxes.

[Fire Me Boy!]

Originally Posted by Pestilence

I'd like to do that and add an overhang in our backyard. We'll see though.

Last year we got close to $9000 back and that was before the whole buying a house thing.

That's a bit morethan we get back. Last year we were aroind $7K.