Re: VA State Tax Refund
Posted by:
Bill.N.
()
Date: April 26, 2012 09:43PM
do Wrote:
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> If you are an ignorant wage slave, you get a tax
> refund.
>
> If not, after your accountant has done their best,
> you make quarterly tax payments.
Not necessarily true.
For many people tax refunds are their best savings vehicles. Give them an extra $100 per pay period and they will probably fritter it away. Withhold it and pay it back as a tax refund and they've got $2400. In addition quarerly payments require FINANCIAL DISCIPLINE. You've got to remember that $10,000 sitting in your bank account in late May is there to pay your June 15 estimated payment and not to be used as a down payment on that new Beemer. Same comment applies to those who shoot to be 90% paid in by January 15 rather than 100%.
Another danger for those quarterly payments is when people fall into the "I couldn't possibly owe as much in taxes this year as I did last year" trap. When their income ends up holding steady or going up they end up getting hit with penalties, even if they are paid in full with their fourth quarter payment. With withholdings the IRS doesn't know when the money is withheld, so you can always make later year adjustments to cover penalties.
The final issue is that keeping your tax money in your pocket makes more sense as safe rates of return go up. Given the pathetic rates of return available on many safe investments at the moment it would be more appropriate to say keeping your tax money in your pocket makes more cents.