Income tax witholding and life changes

Cessnaflyer said:
What are your investment returns going to be on the amount?
Click to expand...

Doesn't matter. Even a single penny lent interest-free is unacceptable to me. Why on Earth would I give anyone an interest free loan when I can instead get be the one getting the interest free loan? As long as I pay at least 90% of my tax burden throughout the year, I don't get hit with a penalty or interest. That's an awesome deal!
 
ATN_Pilot said:
Doesn't matter. Even a single penny lent interest-free is unacceptable to me. Why on Earth would I give anyone an interest free loan when I can instead get be the one getting the interest free loan? As long as I pay at least 90% of my tax burden throughout the year, I don't get hit with a penalty or interest. That's an awesome deal!
Click to expand...
Yeah I'm not smart enough for that ;) A small refund is one psychological corner I cut with my money.

Good you didn't see my refund for 2013 when I forgot about the medical bills and baby helping what I owed. I got back nearly 10% of my pilot income back. Completely botched that one!
 
ATN_Pilot said:
If I ended up owing the IRS $500 at the end of the year, I would be overjoyed. That means the government gave me an interest free loan for 12 months. Awesome!

It's always better to owe a little bit at the end of the year. If you get a refund, you screwed up.
Click to expand...

That's fine if you have a certain amount of financial freedom (and I agree in principle). I suspect going from two incomes to one, and supporting a new born baby are going to make it to where a $500 tax bill is going to be very difficult for @Roger Roger to handle at the end of the year. It might be easier to pay a set amount per month to minimize the risk. If you have the constraint to save it yourself in an account you can't touch, that is the best way to do it. I have been poor and lived paycheck to paycheck, and it would have been tempting to take money from your savings when a bill comes due.


Cliffs: People with less discretionary income might be better off giving the government a small loan.
 
mojo6911 said:
That's fine if you have a certain amount of financial freedom (and I agree in principle). I suspect going from two incomes to one, and supporting a new born baby are going to make it to where a $500 tax bill is going to be very difficult for @Roger Roger to handle at the end of the year. It might be easier to pay a set amount per month to minimize the risk. If you have the constraint to save it yourself in an account you can't touch, that is the best way to do it. I have been poor and lived paycheck to paycheck, and it would have been tempting to take money from your savings when a bill comes due.


Cliffs: People with less discretionary income might be better off giving the government a small loan.
Click to expand...
Naw, $500 would be pretty absorbable. Honestly though with as many things as we are changing this year, I'll be shocked if even using the IRS calculator we get within 500 one way or the other. And also since I started this thread I actually have another possibility lined up to get a little more moolah flowing in.
 
mojo6911 said:
Far from it. Last year, I wrote a check to the IRS to the tune of about 3k. I had set aside about 5k, so I gave myself a "refund" of 2k. I also have multiple loans, lines of credit, and credit cards. EEEKKKK.
Click to expand...

Excellent! So stop making excuses for other people! Financial illiteracy is a huge problem in this country. Enabling people by telling them that it's okay to use the government as a savings account is not helping anyone. It's just making the problem worse.
 
ATN_Pilot said:
Excellent! So stop making excuses for other people! Financial illiteracy is a huge problem in this country. Enabling people by telling them that it's okay to use the government as a savings account is not helping anyone. It's just making the problem worse.
Click to expand...
I don't care what other people do with thier money.
 
ATN_Pilot said:
Excellent! So stop making excuses for other people! Financial illiteracy is a huge problem in this country. Enabling people by telling them that it's okay to use the government as a savings account is not helping anyone. It's just making the problem worse.
Click to expand...


Hmmm. I asked my tax accountant for some help with changing the withholding to get back as close to zero as possible and was told something along the lines of it being a "philosophical" difference between the refund and the 0 or pay camp.

http://www.watsoncpagroup.com/
 
ATN_Pilot said:
Excellent! So stop making excuses for other people! Financial illiteracy is a huge problem in this country. Enabling people by telling them that it's okay to use the government as a savings account is not helping anyone. It's just making the problem worse.
Click to expand...
I don't think I've heard any financial advisor, including Ramsay saying a refund is a good thing.
 
Cessnaflyer said:
How is it a philosophical difference?
Click to expand...

Beats the crap out of me. It was basically made to sound like it's 50/50 between people who can't stand to loan their money to the government so they set up their taxes the prevent that versus people who don't have the financial freedom to do so. With my income, it wasn't a "recommended" method.
 
Cessnaflyer said:
How is it a philosophical difference?
Click to expand...
It's a philosophical difference because you aren't changing how much money you are paying it's just if you are ok with giving the government a free loan.
I'm in @ATN_Pilot's camp. It's pretty telling when Spring comes around and you see the advertisements for spending your tax refunds on x product. If I got a tax refund over $50 I wouldn't be buying anything, I'd be too busy trying to figure out where I went wrong.
Where I differ is I'm not a fan of being too far on the other side either. I like owing a small amount, <$2k.
 
ATN_Pilot said:
Well, that's true, it is probably 50/50. Fifty percent of the people are complete morons, and the other fifty percent aren't.
Click to expand...

Would be nice if TurboTax made "zeroing out" your tax easier. Anything over $0.00 would owed would surely give me heartburn.
 
ATN_Pilot said:
Get an accountant. Mine tells me exactly how much to take out of each pay check. She even does quarterly adjustments.
Click to expand...

I'll bet that's not cheap. Especially an aviation specific accountant. I paid about $200 for my "accountant" to do my tax return. The retainer would probably be ridiculous.
 
I pay about $1,200/yr, but most of that deals with my business. Most people know so little about taxes that they'll at least break even by hiring the accountant (assuming they're able to itemize). You also need to consider the time value of money. If you waste a day doing your taxes, that's a day trip you could pick up instead. Assuming an RJ captain making $70/hr and a day trip worth 6 hours, that's $420 he could earn in the same period of time. Pick up the day trip for $420, hire an accountant to do the taxes for $200, you just got an extra $220 for the same amount of time spent working.

Also consider that money spent on tax preparation is deductible. That $200 really only cost you $150.
 
You must log in or register to reply here.
Back
Top