tax refund blog

(I can’t find the original source of this picture. If it’s you, please let me know!)

Over at The Simple Dollar, Trent talked about the importance of doing your taxes as soon as possible.

I guess it might seem unusual to get SUPER EXCITED about tax time, but I fit into the category of people who are probably claiming too much, so we almost always get a refund. I’m aware that working things that way is like giving the government “an interest-free loan,” but you know how Dave Ramsey recommends paying off your lowest loan amount first, disregarding interest rates? It’s like that. The thrill I get of getting a chunk of money at once…. it’s totally a rush! Psychologically, it does me good to get a refund as opposed to more money spread out over the year.

Every year, I get more and more impatient waiting for our W-2s to come, while dollar signs dance in my head. I estimate, I plan. And while I wait, I log into TurboTax via our credit union (discount, baby!) and put in as much as I can.

In spite of being a half-way intelligent human, I still get so disheartened as TurboTax gently explains to me that we don’t qualify for the childcare credit (because I haven’t entered in any income yet). I enter our donations to Goodwill, I enter any 1099 or 1098 or any-other-number forms emailed to me by Sallie Mae, Edward Jones, TIAA-CREF, and CFNC (where we have L’s pitifully small 529 College Fund).

Then, Oh, happy day!, we got our W-2s and I entered them and I was extremely thrilled to find out we’re getting more back than we did last year!

Last year, we donated a car, which was a write-off. However, I was also still paying taxes on my rollover from an employer-sponsored retirement plan to my Roth IRA (that was spread out over 2011 and 2012 – thanks again, TurboTax!). Now there’s no more tax to pay on the IRA rollover, so our refund is up!

Because I start the tax process so early, it takes about two weeks (or however long it takes for the W-2s to arrive) to get it all entered. Two days ago, our tax refund stood at a healthy number. Then, yesterday, when I finally decided to pull the trigger and file, it went up! What? I know! It went up by about 25%!

What We’ll Do With Our Return

I had originally planned (almost down to the last dime) where our tax refund would go. Much of that stays the same, but with the extra bonus, I decided that would go towards getting my husband a present for his graduation (back in December) and Christmas. I didn’t get him anything, but as I mentioned before, he bought me a very expensive Christmas/Graduation/Birthday gift, while I got him nothing.* His gift comes to about half of the extra windfall, and I still haven’t decided what to do with the rest of it. I may get a new outfit for interviews (if I get lucky enough to land one), as I truly have nothing that fits anymore (woohoo, losing weight!) that looks that professional. (Khakis and a turtleneck sweater probably isn’t going to make that great an impression, amiright?) H also needs new pants, though he will continue to wear the ones with the holes in them and frayed bottoms as long as I will let him.

Chase Credit Cards #1 & #2 = $500

  • This will be spread out over both cards, and they’ll be back down to $0 when we do this. Whew.

Citibank Credit Card = $697 (which will be added to our regular $500 payment)

  • This will get us to our goal of paying off this card in June, because July and August are our low-income months! My hope is still to put the same amount of money to our car loan, but if we have unexpected expenses, that extra $500 in July and August will be a huge help.

Savings = $500 (which will be added to our regular $450 transfer)

  • To clarify, the “savings” is not an emergency fund, though it could serve as that in… um, an emergency. Monthly, we’re taking $450 out of our paychecks and putting them into the savings account, but the funds are all earmarked into categories that we don’t spend in every month (car insurance, H’s unreimbursed business expenses, etc.). This month, I had to take over $100 out of that fund (leaving less than $400) to pay bills that I didn’t want to put on the credit card.

H’s gift = $300 (hopefully a little less, but I like to estimate on the high side)

Car loan = Whatever is left over!

  • It’s possible that I may use a little of that Car Loan money to purchase an outfit for me and/or pants for H. We rarely buy clothes (for ourselves or even for L, because my mom is super generous!)

All in all, I’m super excited about getting our tax return! According to TurboTax, the IRS won’t start processing returns until January 31st, so we’re hoping we get something by the middle of February or (more likely) the end of that month. I’m so looking forward to posting a screenshot of the difference in our debt between January and February! OMGTAXREFUNDOMG (#sorrynotsorry)

Now, next year may look completely different, as our state has gone to a new way of calculating dependents and our sales tax goes down. I don’t know whether this means we’ll end up owing taxes at the end of the year and have higher take-home pay, or what. I’ll be interested to see what our paystubs look like this week when we get paid.

* Because really, gifts (while I LOVE them and love to give them…), well, they’re just not necessary. Paying debt? Now, THAT is necessary.

Happy tax season!

What are your plans with your tax refund? Or are you the kind of person who makes your tax balance out to $0 each year because you don’t want Uncle Sam to have your moolah?

– M.

P.S. I’m not getting a kickback from TurboTax or Inuit or anything from this (which is probably pretty obvious, but I feel like maybe I should say it anyway). Just sharing what I use.

One thought on “I HEART TAX TIME!

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