I am just wondering because the response saying my tax refund was higher this year than last is not the first time I have seen that.
Your refund has nothing to do with the taxes you paid. For the love of my sanity look at your withholding in 2009, 2010, and 2011. I would bet you withheld more in 2011 than 2010 and so on down the line. Withholding is in no way an exact science. More than that they didn't deal with extending the Bush tax rates until the middle of January. By the time payroll caught up with this 1/12 of the year was withheld at the higher tax rate so of course everyone got a higher refund.
Not because you paid less!! Because you withheld more!
I find this frustrating because I do payroll and have to explain to employees withholding is an estimation of your tax liability. Clearly your employer cannot calculate the impact of a mortgage, spouse, child's education, none of that! Unless you ask your accountant everyone over withholds!
So I am just wondering how many people think withholding is paying taxes and refunds show a lower tax rate and why?
To me all a refund means is I lent the government my money at zero interest. I really don't like the government that much regardless of who is in charge.
Laurie, what does that have to do with government policies or tax rates? Those have been deductions for a long time and aren't going anywhere, not even under Romney's plan.
Katie, you are right, I will remove that sentence. Thanks! :)
Katie, it isn't a matter of being smart, I work with some very smart people. Just last week one of them said that the government is so unfair, taxing us at 40% just because it was a bonus. I had to explain to her that that was just my boss being the b word, she sets the withholding for bonuses at 40% for anyone she doesn't like claiming well it is a bonus after all. Clever one that one is!! :( So I told her, you will get a refund for the difference, just kind of sucks we can't have the money now. Yeah, she calculated mine at 40% too, grrrr
Malia, that was probably that stupid making work pay or whatever it was called. The problem was the everyone had to lower withholding so it looked like everyone was getting more money but the credit was per household so if both husband and wife worked you under withheld. I had to warn a mess of our employees to bump up the withholding because they were going to slap penalties against people who under withheld.
It is kind of funny that some people believe a refund is a good thing, but what ever. I certainly don't get upset about their misunderstanding.
So to get my refund, I would have to send them a monthly payment (estimated tax), file my tax, then wait for them to send some money back to my account.
No thanks!
I don't know how many people will be brave enough to answer your questions.
The way this is worded - "So I am just wondering how many people think withholding is paying taxes and refunds show a lower tax rate and why? Because that just isn't how the system works" sounds to me like you're asking "What the hell is wrong with you people?" :)
For the record, I agree with you. It's pretty simple really. But not everyone is as smart as we are. Just the other day I was at a store returning a sweater my daughter didn't want. I paid in cash and was due $23.94. I handed the cashier a penny and said, "I'd rather not get 4 pennies!" She proceeded to hand me $23.94, and then looked little confused and then gave me another penny. I handed her the 5 pennies and said, "That's why I gave you a penny in the first place, so I wouldn't get anymore. Could I please have a nickel?" Honestly, she looked at me like I was crazy! DUHHHH!!!! Sorry for the story. Just thought I'd share how dumb some people are.
Our goal, every year, is to write a $50 tax check to the US government. That way, we know we've withheld *just* enough without giving the government an interest free loan and without having to pay any penalties on money owed to the IRS (it rarely turns out that way, however). It actually makes me upset when we do our taxes and find the US gov owes us $3000 - seriously, I could have used that money the previous year, when it was earned! When people tell me all about their huge tax refunds, I just have to roll my eyes...You just lent the US gov a lot of money without getting any interest in return, people!
I'm not crazy about how the whole withholding thing works. The fact that many don't understand it speaks to the fact that we need a mandatory finanical literacy type course in high schools.
A friend's father used to say people shouldn't be allowed to vote until they'd taken a basic economics course. Probably same for accounting... I agree of course with what you're saying and it's discouraging bc things like that can decide how people vote.
You're so right! I find that a bit irritating too. I
you are so right.....it's not about the refund.
it's all about your income, the taxes paid on that income, your deductible expenses, & your withholding.
crazy.
Filing taxes, for me, is an annual exercise to see how much of *my* money I can get the government to return to me each year. This year despite the huge decrease in my annual income I expect to be forced to new heights of creativity to avoid having to pay even more in than what has been deducted as I have used *my* retirement to augment my income and taken a 2nd job which, while needed to keep my house, will screw me in the end.
Plus it really pisses me off to watch my loan to the government be misspent and mishandled year after year.
You're so right-and thank you for articulating that in your posting.
I also like the fact that you point out that people who get refunds have worked all year and paid income taxes, Social Security, etc-which gives the gov a boatload of cash to use as they wish.
Nope my husband is still paid the same amount same with holding...but we got larger deductions.. Purchased a car.. Got a deduction.. Deduction for property taxes, deduction for medical expenses, deduction for college tuition.
I was just saying we are better off than we were. Isn't that what the big question ver all was in this campain?
. But I also just realized.. We make so little money, we qualify for different deductions.. Than a lot of you..I guess it would be different if you make more than 50,000 a year...and in Texas we do not pay a state tax...
I do like to get a bit of a refund, but not a huge one.. why loan money to the government at 0% interest?
What really hurt was that last year, some things HAD changed, and instead of getting any refund at all, we owed $738 ......... I had to make arrangements with the IRS to pay that off over time.... we did change our withholdings, so hopefully that won't happen again.
If your withholding was the same year over year, and you received a larger refund one year, it could be because you were able to take a deduction that wasn't available the previous year. I'm always surprised when our accountant mentions new deductions - some of them are so convoluted, but yet this is what tax code dictates/allows for. When you are self-employed (or are the owner of a corporation), you're able to take a mind-boggling number of deductions, and they change every year, it seems like.
If you got a bigger tax refund this year over last year, it means you lent the government more money at 0% interest. It also means you paid less in taxes for your particular situation in the year you got more money back in taxes.
This is provided you didn't change any deductions.
Good luck to you and yours.
