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Originally Posted by ratbastid
You don't WANT a big tax refund. What you want is to come even, and pay nothing or very little on 4/15.
Getting a fat refund check might feel good, but what would feel even better would be to put the extra that's getting withheld into an interest-bearing instrument of some kind and let it grow. Getting a refund check means the government has been earning your interest all year.
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While that is true, it's not always effective for a good number of people, including myself.
It's the same reason why Ron Popeil can sell things in just 4 easy payments of just $29.99 instead of $119.96. Many people don't have the fortitude nor the discipline to do such a thing with each paycheck.
People see they have the money, and they spend it. Or for some, accumulate that money to $400 then see iPods on sale and figure they can blow the wad on that.
The net event at the end of the year is they don't have any of that money at all.
What also cannot be done during the year, is to take depreciation on rental properties, mortgage interest, and itemized deductions such as transportation, car mileage, food & entertainment, magazine subscriptions, membership dues, etc. Those itemizations can net you a refund even if you "broke even" as suggested by ratbastid.
Mostly, to insure that I don't worry about having to pay taxes, when filling out your W4 and submitting to your employer I request the higher withholding of Single 0 dependents. If I selected Married 2, I'd take more money home as ratbastid suggested, but the difference would be small and squandered on small things I wouldn't be able to even recall at the end of the year.
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