IRS tax refund calculator?

lifeonthehill · December 2013

Has anybody ever used the IRS tax refund calculator? Is it relatively accurate?

I know it is just an estimate but the number I got made me a little giddy. I didn't expect much for a return but if we used our refund and saved for one month we could pay off another SL and be three months ahead of schedule for 2014 which would be fantastic. Trying to not get ahead of myself obviously I am just curious.

hoffse · December 2013

Eh I'm not sure how accurate it is. If you want to get a decent sense of it, you can save your last paystub of the year and plug those numbers into turbo tax. I think I've done that in years past and it's been pretty accurate.

I'm anticipating about a $2K refund from H's law school payments. As far as I'm concerned, anything over that is gravy.

He worked this summer at a couple of law firms and made pretty good money, but I think they taxed him as though he was working for them all year long instead of just 6 weeks each. If that's the case, we ought to get some of that back as well. It will be interesting.

Ours is going into our house downpayment fund.

Anybody else have good plans for a tax refund?

lifeonthehill · December 2013

hoffse said:

Eh I'm not sure how accurate it is. If you want to get a decent sense of it, you can save your last paystub of the year and plug those numbers into turbo tax. I think I've done that in years past and it's been pretty accurate.

Thanks! I used our last paychecks of the year on there. I will do turbo tax as well.

I really never considered getting money back until we had kids honestly. We got about $250 last year which was great but that is hardly anything to the $1,900 the calculator predicted. The last two years we were bouncing between jobs, getting hardly any hours, or being paid under the table so we didn't have much to claim.

brij2006 · December 2013

I've used it in past years, and it's a decent estimate. Although I'm 1099's on about $10k+ worth of stuff, so mine always fluctuates based on expenses.

Our refund gets put aside to pay property taxes (we both get more taken out for this), and anything leftover will go toward debt.

Xstatic3333 · December 2013

I'm expecting a good refund this year, although I'm pretty weak on tax knowledge so who knows what we'll end up with. Factors that I think work in our favor:

-We got married in August and will file jointly, but were withholding at the single rate until that point and kept withholding at the single rate after.

-Our income until August, as a couple, was $60,000ish a year, but since early September went up to $90,000ish a year (ish due to my many side jobs). Our new jobs have been withholding at the single rate, and as if we were at them all year long. 8% of H's salary goes to his pension, which I think is pretax, though I'm not sure if that helps or hurts us.

-I'll get the lifetime learning credit, and we've both paid a lot of Federal student loan interest.

Thinks that could count against us are a $1000 summer stipend I got, another $1000 or so in self-employment income (kept track of by the company I contract to), and the fact that I live in a different state from where I work. Last year I ended up owing the state where I work somehow. Maybe understanding taxes better should get added to the New Year's resolution list. I know my new job (in the same state) is withholding state taxes so hopefully that won't be an issue this year and I'll just owe a small amount to MA from my side jobs.

If we get a good refund, we'll either put it toward's H's car or my Plus loan. The loan is higher interest, but the car is already starting to have problems so I'd like to make that the priority. H will probably want to spend a small amount on something fun, too, but I'll try to limit it to a nice dinner or something similar.

vlagrl29 · December 2013

I can never guess how much we will get back, but last year was such a pleasant $1800 surprise

I'm hoping for the same again this year because we have about the same deductions with the HSA, student loan interest, and the child deduction. All of our business deductions help as well.

hoffse · December 2013

Xstatic, most of those things indicate that you should get a pretty good refund.

Re: state taxes - most states that have an income tax require you to pay the tax if you live or worked in that state. Same for if your spouse lived in a different state than you - in that instance your income would be taxable in both the state of your residence, and the state of your SPOUSE'S residence if you are married filing jointly.

The scenario above is going to happen to me an H for 2013. I'm an AL resident (where I live and work), and he remained a GA resident while finishing law school in TN. He had just never bothered to become a TN resident - he had virtually no income his first two years of law school, so it didn't really matter up until this year. But TN has no state income tax and GA does. We got married in April of this year, and I DO have a good income... last January I had this "aha" moment where I realized that my income would be taxable in GA as long as he remained a resident there. And of course, my paycheck only withholds AL taxes, not GA taxes.

So last January H changed his residency to TN to avoid GA income taxes, but we will still owe GA taxes for the 12 days of 2013 that he was a GA resident. Hopefully the GA standard deduction will wipe most of it out, but it could have been huge.... like, thousands of dollars huge if I hadn't realized it.

I think that learning how it all works is really important, especially in years where unusual things happen, like marriage or the birth of a child.

First thing to learn is the difference between a tax deduction and a tax credit. Deductions reduce the amount of income you are taxed on. Credits reduce the actual tax owed. For most folks a $1 deduction is equal to maybe a $0.25 tax savings (since your income is being lowered by $1). However, a $1 tax credit is equal to $1 in tax savings since the actual tax bill is reduced with a tax credit. So credits are better than deductions, if for some reason you can't take both.

Someday I'm going to get to the point where I can just withhold the correct amount so I owe the government $100 every year instead of them owing me $2000. While it feels like a windfall, I would rather that cash come into my pocket year-round than once a year. The gov earns an enormous amount of interest on money that people overpay in taxes through faulty withholdings... it's actually sort of a scam, but because so many folks get big refunds once a year nobody seems to care that the gov is earning interest on money that's not actually theirs. It bothers me so much.

Ducktale · December 2013

hoffse said:

Someday I'm going to get to the point where I can just withhold the correct amount so I owe the government $100 every year instead of them owing me $2000. While it feels like a windfall, I would rather that cash come into my pocket year-round than once a year. The gov earns an enormous amount of interest on money that people overpay in taxes through faulty withholdings... it's actually sort of a scam, but because so many folks get big refunds once a year nobody seems to care that the gov is earning interest on money that's not actually theirs. It bothers me so much.

This exactly! Sure, I'd be pleasantly surprised if we got a return because who doesn't like extra cash? However if we get much that just means we did it wrong. I expect less than $500. But whatever we get back will be going into our next car fund.

hoffse · December 2013

Yeah it's totally true. I've been doing it wrong for a few years, but that's because we get some education tax credits - I'm just not certain how to adjust for that because the amount varies every year, so we're just letting it happen until those are done for us (either this year or next year). Hopefully after that we can get to the point where it's a minimal refund, or better yet a small payment to the IRS each year.

Last year I owed the state of Alabama $50. It was perfect.

MommyLiberty5013 · December 2013

Our tax refund is going to our Toyota Sienna savings.

Xstatic3333 · December 2013

Thanks @hoffse, very helpful explanation. That's a drag that I'll be owing both states for a while. The situation is not likely to change since H's job is in MA, where we live. Mine is in RI, which has lower income taxes. It is something to think about since we were considering moving to RI; I guess if we did than H's higher salary would be the one taxed twice. It's so good that you figured it out so you and your H didn't end up in the same situation!

I like getting the large refund since I am more likely to use it productively, but I never thought about the government earning interest on my money. That's definitely crap.

hoffse · December 2013

Xstatic, let us know how that works out. I know GA taxes both spouses as long as one is a state resident, but I suppose there's a possibility that not every state does that.

Xstatic3333 · December 2013

hoffse said:
Xstatic, let us know how that works out. I know GA taxes both spouses as long as one is a state resident, but I suppose there's a possibility that not every state does that.

According to e-how and other medium-reputable internet sources, I may be in luck. Apparently MA will issue a tax credit for the income tax I pay in RI, as long as the amount owed RI is lower than the amount owed MA. That seems much more fair to me. We're looking into having our taxes done by an actual accountant this year to make sure we get all this right. I will let you all know how it turns out!

smbenevides1989 · December 2013

Xstatic3333 said:

Xstatic, let us know how that works out. I know GA taxes both spouses as long as one is a state resident, but I suppose there's a possibility that not every state does that.
According to e-how and other medium-reputable internet sources, I may be in luck. Apparently MA will issue a tax credit for the income tax I pay in RI, as long as the amount owed RI is lower than the amount owed MA. That seems much more fair to me. We're looking into having our taxes done by an actual accountant this year to make sure we get all this right. I will let you all know how it turns out!

I have very little knowledge about taxes. DH and I both work in RI, but live in MA. We just got married in July. It will be very interesting to see what will happen when we file jointly. DH does have RI and MA state taxes withheld from his paycheck. I chose to just have RI taxes taken out. Because of all the changes, we will be filing with an accountant this year. I just don't want to make a mistake, but I will check out TaxAct.com and see how things will roll out this year.

Xstatic3333 · December 2013

smbenevides1989 said:

Xstatic3333 said:

hoffse said:
Xstatic, let us know how that works out. I know GA taxes both spouses as long as one is a state resident, but I suppose there's a possibility that not every state does that.
According to e-how and other medium-reputable internet sources, I may be in luck. Apparently MA will issue a tax credit for the income tax I pay in RI, as long as the amount owed RI is lower than the amount owed MA. That seems much more fair to me. We're looking into having our taxes done by an actual accountant this year to make sure we get all this right. I will let you all know how it turns out!

I have very little knowledge about taxes. DH and I both work in RI, but live in MA. We just got married in July. It will be very interesting to see what will happen when we file jointly. DH does have RI and MA state taxes withheld from his paycheck. I chose to just have RI taxes taken out. Because of all the changes, we will be filing with an accountant this year. I just don't want to make a mistake, but I will check out TaxAct.com and see how things will roll out this year.

What a coincidence that we're both in the same situation! We could be neighbors. I definitely think going with an accountant is a smart bet. Did you end up owing MA last year? I'm in the RI 3.4% bracket (assuming that just my income counts since H's was earned in MA.)

smbenevides1989 · December 2013

Xstatic3333 said:

Xstatic3333 said:

Xstatic, let us know how that works out. I know GA taxes both spouses as long as one is a state resident, but I suppose there's a possibility that not every state does that.
According to e-how and other medium-reputable internet sources, I may be in luck. Apparently MA will issue a tax credit for the income tax I pay in RI, as long as the amount owed RI is lower than the amount owed MA. That seems much more fair to me. We're looking into having our taxes done by an actual accountant this year to make sure we get all this right. I will let you all know how it turns out!

I have very little knowledge about taxes. DH and I both work in RI, but live in MA. We just got married in July. It will be very interesting to see what will happen when we file jointly. DH does have RI and MA state taxes withheld from his paycheck. I chose to just have RI taxes taken out. Because of all the changes, we will be filing with an accountant this year. I just don't want to make a mistake, but I will check out TaxAct.com and see how things will roll out this year.
What a coincidence that we're both in the same situation! We could be neighbors. I definitely think going with an accountant is a smart bet. Did you end up owing MA last year? I'm in the RI 3.4% bracket (assuming that just my income counts since H's was earned in MA.)

Imagine if we were! I did not actually. I started working in RI in July so I think that could make the difference. On my W-2, I did say I was married, but I claim 0 with no deductions. I have always done that even when filing Single and we have a child. I guess we will see what will happen this year.

IRS tax refund calculator?

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