Declare The Pennies On Your Eyes (Taxman)

3 02 2009

Getting a tax refund is like giving the government an interest-free loan on your money.  That being said, I am always slightly disappointed not to get some money back. 

This year, we owe the federal government $267 and we will receive a $184 refund from the state of Illinois.  I have no problem paying up to $500 a year (then I am the one getting the interst-free loan from the government). 

Last year, we owed the shocking amount of $1730!  April 15, 2008 was an extremely sad day for me. 

My dad has additional money withheld from his paycheck so that my parents will get a large enough refund to pay their property taxes.  They own their house and their cars and have no bills.  I am dumbfounded as to why they use the IRS as a savings account.  Unlike an account at a bank or credit union, they have have absolutely no access to this money until they do their tax return the following year.  There is no interest paid on this money.  They could have gotten at least 1% from a money market account. 

If they get $3000 back this year, that is $250 a month too much that they paid the IRS.  Personally, I would rather have the additional income each month and save for my own property taxes (I am also anti-escrow accounts). 

For those of you who would rather have extra money in your pocket each paycheck than getting a lump sum in 2010, check the tax tables and change your deductions accordingly.

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One response

3 02 2009
idonotknowme

Isn’t it nice how if the government over taxes you throughout the year they don’t have to pay you back until the end of the year, but if you under pay them throughout the year, settling up on April 15 isn’t good enough and you have to pay “underpayment” penalties?

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