2004 Tax Returns

[Northside Rovers]

I just got a call from tax guy - I am getting a very nice refund for 2004.

Now, I must say that I only claim one kid when I have 2. My wife stays home so I think I get something there too. My goal in life is to never owe taxes at tax time.

I also finally sold some dog tech stocks in December that I had been holding on since the pre-bubble burst. I should have sold them years ago. I lost a bundle. They were worth $20,000 pre-burst and about $6,000 now. I sold them to pay off a credit card I am tired of paying monthly.

But it still nice to get a big tax refund. I am now offically in a good mood. :D See?

[Andy_B]

It is great to get a nice tax refund, but from a strictly financial standpoint, that is not the best thing.

I have heard that what you should try to do is shoot for getting a $0 tax return (ie don't owe anything nor be owed anything).

By getting a big tax refund, all one affectively does is give the government a interest free loan instead of having that money work for you through out the year.

If one continues this pattern over a course of many years, the opportunity costs could grow dramatically.

Andy

[Gemmell]

Andy_B you are right everyone should try to minimize their amount owed to or from the governement. I assume Northside Rovers ended up with a large loss $14,000 on the stock sale which is very tough to plan for.

I did something very similiar this year as I sold off the rememants of all my ATT company stock (Lucent, ATT Wireless, etc.). I didn't plan it, but decided that once ATT Wireless was sold off to sell the rest, as I currently don't have any other stock investments right now. And that if I waited to January I would have paid for keeping the account open.

So I was left with a $2-3000 loss on stocks this year, which I wasn't planning to do.

[Northside Rovers]

I have heard that what you should try to do is shoot for getting a $0 tax return (ie don't owe anything nor be owed anything).

By
Andy

I have heard and read the same. But I HATE having to pay taxes in one lump sum, in addition to doing it all year. One year I owed liek $400 and I felt like it was watsed money. I didn't expect to pay it and it felt like I was burning money for no reason.

The way I look at it is that its my no-interest savings account. Up until maybe this year, had I invested that money for several years it would likely have been worth less than if I had done nothing with it.

Also - the incremental gain of having an extra $100 a week would get lost. would be tempted to spend it on frivilous items. This way I can devote good chunks of it towards something concrete and long term. And still have a little fun.

[Glenwood Lane United]

To me, this is the ultimate "Eye of the Beholder" situation.

I view it as kind of an IRS Christmas Club. I usually get back between $500-1,000 from federal, and 5% of my Real Estate taxes paid (in 2004, it was about $3,000) from state.

I'm cool with that.