Tax Withholdings and all the good stuff

Sorry for the late post today.  Suprisingly, there’s only wired internet in my room and that doesn’t work with my laptop. You’d think with this being a 4 star hotel that has a golf course, that the hotel would have internet in my room – but I guess not.

I know tax time isn’t for a while, but such a bulk of my paycheck is taken out every two weeks for taxes that I can’t help but constantly think about it.

I’ve been thinking about increasing the number of my personal allowances because I will get a big refund next year.  In the past I have owed a couple thousand overtime, except last year in which I owed nearly $7,000 or something (this is because I owed taxes on the money that my dad left me and I didn’t withhold enough from the inheritance in the first place.

“Payroll pitfalls
Payroll withholding is something you want to get just right. Why?
•    If you have too little taken out, you’ll owe money when you file your return. That’s not good, obviously — no one likes to write out a big check to Uncle Sam.
•    If too much is withheld, you’ll get a refund, and that’s not good either. What’s wrong with getting a refund? That means you’ve given Uncle Sam free use of your tax money — money you could have made better use of yourself throughout the year.”

Read more: Adjust withholding so you dont get a big refund every year http://www.bankrate.com/finance/money-guides/how-to-adjust-your-withholding.aspx#ixzz1XxyWSRJh

Anyways, I’ll be getting back around $4,000 to $5,000 next year and the BF will be getting around $1,500 to $2,000.  We are giving the government an interest-free loan, whereas we could be earning interest on it.  However, I do like having a big windfall all at once, and I don’t know if I trust myself not to spend the money if I received the smaller amount of around $400 a month.  I know that last sentence is a horrible thing to say as a personal finance blogger!

Me and the BF usually use a part of our refunds for fun and then save the rest. However, this year we’re getting so much and I’m really excited for it.  BUT, I constantly think that it would also be nice to have the money now.  Should I change my withholding? What does everyone else do?

Also, I remember when I used to manage a clothing store, people would come in and use their whole tax refunds on shopping.  And I’m talking thousands of dollars.  That just never made sense to me!

What do you use your tax refund usually for? Vacation? Emergency fund? Fun? Pay down debt?

Comments

  1. Becca. says

    thankyou michelle! :)so glad you like the post!thanks for the comment on my blog :)XOXO, BECCAhttp://www.fashion-train.co.uk

  2. Jennifer says

    Well, IF we got a refund, it would be to debt. No doubt. Ours is so high though, I just don't feel comfortable spending it on life until it is WAY down. However, we usually do not get refunds due to my husband's pay structure. Our goal for 2011 is to only owe 1 or 2 thousand!In your situation however, I would pay a little toward debt and little toward a savings plan and then some for fun. Best of all worlds?

  3. BTHappyHomeowner says

    In the past when I've received refunds, they've gone straight to debt and savings. I haven't had a refund in the past few years because I finally figured out the withholdings game in a way that works for me–no interest free loans from this homeowner!

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>


CommentLuv badge