So by now, if you’re in the U.S., you should have either finished your taxes or requested an extension. If you haven’t, stop reading this post and go get an extension!
Okay. So, those of you left, how were your taxes this year? Did you owe a lot of money? Did you get a lot of money back? Did you ultimately break even? There are differences of opinion as to what the best result is. Some people like to owe money – that way, their money has been with them the whole time, earning interest for them, not for the government. Some people like to get a huge refund – it’s like a savings account that you don’t have to think about (of course then the government is earning all that interest). And some prefer to get that final number as close to zero as possible – no need to pay anything but the government wasn’t getting any interest on their money either.
Personally, I like to get a small refund. It’s less about getting the money back and more about knowing that I have the padding so I don’t have a big payment come tax-time. It’s always a bit of a balancing act, and things will definitely change for me when I do my 2011 taxes, as I bought a house and will have a mortgage interest deduction. I’ve adjusted my withholdings slightly, but who knows.
What I do know is that I like to finish my taxes as early as humanly possible. I saw those lines outside the post office. I do not ever want to be in them, thank you very much.
What is your tax withholding policy? Love that huge refund? Consider it a game to try to get as close to zero as possible? Hold on to your money until the last second? And do you like your method?
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
As early as all documents are received (1099’s, W-2, etc)…and I check where I am quarterly with my withholdings so I can end up +/- $200 or so. I hate writing a check to the Government, but I also hate not having that money all year long to apply to my financial goals!