Financial Advice Needed.......

[mrbstephens]

DH just started a new job this week.
He filled out his W4 form and accidentally claimed 5 instead of 4 like he had at his last job. The first check he received today is $130 more because of it. I realize if we keep it this way our income tax return will be less next year. So, will our return next year be $130 x 12 months = $1560 LESS or am I figuring this totally wrong? We're fully enjoying the extra money currently, but we also like our return at the end of the year. If it's just $1560 less we'll keep the claim at 5, but if it turns out to be much more, then we'll have to change it back to 4. Any accountants out there? Anyone with experience in this? Thanks so much in advance!

 

[FarmerJamie]

I guess it boils down to whether or not you believe the govt can hold onto your money better than you can until you get the refund.

The power of compounded interest is your friend. If you can have the will power to take that $130 at save it away in some interest-bearing saving vehicle, you will have more $$$ than waiting until the govt writes you a check for *your* money.

You don't get interest on your refund money!

Ideally, you want to pay money at the end of the year.

 

[mrbstephens]

I guess it boils down to whether or not you believe the govt can hold onto your money better than you can until you get the refund.

The power of compounded interest is your friend. If you can have the will power to take that $130 at save it away in some interest-bearing saving vehicle, you will have more $$$ than waiting until the govt writes you a check for *your* money.

You don't get interest on your refund money!

Ideally, you want to pay money at the end of the year.

Living on one income and barely scraping by we're thrilled to have this $130 extra a week to finally live a bit more comfortably. And by that I mean, paying the bills on time/paying off debts, buying clothes and shoes, GAS! You get the point. Thanks!

 

[Wannabefree]

If you guys are barely scraping by right now you probably aren't paying much if any in anyway depending on your tax bracket and deductions You may not have anything to worry about. I did notice...does you DH get paid weekly or monthly? If he is getting $130 extra WEEKLY it would be x52 rather than x12. If it's a monthly check then that is the correct number to deduct from your would be tax refund. I can't think of many who get paid monthly, so thought it may be a mistake?

 

[Wifezilla]

Why overpay the gvnmt? Yes, it might be nice to get that refund check, but it really does limit you. If you have weeks when you don't need a lot, stash away some cash. If you do need it, it's there. Make your own "refund" account.

Plus how many states are saying "Sorry, you have to take an IOU! Too bad so sad!" now? No WAY would I take a chance.

 

[AnnaRaven]

If you guys are barely scraping by right now you probably aren't paying much if any in anyway depending on your tax bracket and deductions You may not have anything to worry about. I did notice...does you DH get paid weekly or monthly? If he is getting $130 extra WEEKLY it would be x52 rather than x12. If it's a monthly check then that is the correct number to deduct from your would be tax refund. I can't think of many who get paid monthly, so thought it may be a mistake?

And, of course, if it's biweekly, it's x26.

 

[Marianne]

Did you get a big refund last year? If so, then you had them hold out too much, IMO.
I agree with everyone else, in a perfect world you want to owe just a bit, or maybe get just a bit back. The last time I checked, we weren't getting diddly squat in interest in our savings account. But any interest is still a good thing, especially with some time behind it.

We're self employed, so our situation is different. But I remember those days of waiting patiently for the refund because that was the only extra money we got all year. I kind of thought of it as a forced savings account. The first year we got a 1099 and had to pay $2300, I almost had to pull over to the side of the road to upchuck. We hardly had enough to eat, couldn't afford to buy shoes for the kids and I had to come up with that??? It was awful.

Can you have them put $50 or something into a savings account before you get your check or something? Then at the end of the year, if you have to pay taxes, you'll have it. If not, you'll have it for whatever else you need, plus you'll have some extra cash each payday.

I thought the Feds changed all that so there wasn't as much withheld from checks now. ?? Not my department, though...

 

[FarmerJamie]

I guess it boils down to whether or not you believe the govt can hold onto your money better than you can until you get the refund.

The power of compounded interest is your friend. If you can have the will power to take that $130 at save it away in some interest-bearing saving vehicle, you will have more $$$ than waiting until the govt writes you a check for *your* money.

You don't get interest on your refund money!

Ideally, you want to pay money at the end of the year.

Living on one income and barely scraping by we're thrilled to have this $130 extra a week to finally live a bit more comfortably. And by that I mean, paying the bills on time/paying off debts, buying clothes and shoes, GAS! You get the point. Thanks!

I'm now confused as to whether we are talking monthly or weekly paychecks, but regardless, if you can find a way to save $20/week ($80/month), you'll have about a $1000 saved by the end of the year - and still be able to have some cushion in your regular speding.

Been there, scraping by, paycheck to paycheck. It's hard and it takes both husband and wife together on the same page to make it work right. Good luck to ya!

 

[mrbstephens]

If you guys are barely scraping by right now you probably aren't paying much if any in anyway depending on your tax bracket and deductions You may not have anything to worry about. I did notice...does you DH get paid weekly or monthly? If he is getting $130 extra WEEKLY it would be x52 rather than x12. If it's a monthly check then that is the correct number to deduct from your would be tax refund. I can't think of many who get paid monthly, so thought it may be a mistake?

See, I knew I was figuring wrong! Yes, of course 52 weeks in a year.....DUH! He gets a weekly paycheck. You're right. He'll have to change it, because now we're talking over $6700 which is basically our whole return. We like the return, because we are not good at saving money. We'll need that return to buy DH a new(er) car next year. Thanks so much for giving me the slap in the head I needed!

 

[mrbstephens]

Thanks everyone for your advice. I knew it was too good to be true! :/