Tax refund receivable

I am toying with the idea of including my tax refund receivable in my monthly net worth calculations. I figure that I will get at a minimum a $4,000 refund from both my federal and state returns for 2008. That equates to $333 a month to add to the receivable. It is money I am assured to get so I don't see a problem with including it in my net worth.

Many people will say that it is better to have less withheld from my paychecks. I have actually reduced my withholding to keep an additional $100 per month that I have added to my bi-weekly automatic savings. As of April 30th my tax refund receivable was $1,332.

Impact of federal withholding change

This week's paycheck is the first showing my new withholding. I had previously claimed only one federal exemption but now I am claiming 4. The difference is about $74 every two weeks. Starting next month I am going to add that to my savings each paycheck.

I did not change my state withholding so I expect to still get a $1,200 refund next year. My federal refund will be in the $3,000 to $3,500 range instead of $5,300 like it was this year. I think the extra $74 will do more for me sitting in a savings account then as a future tax refund.

W-4 Withholding Changes

I am changing my federal tax withholding so that I can keep more of my paycheck when I earn it. I am hoping to increase my net pay by about $100 per paycheck and put the money in to my savings. I do have to admit that the "forced savings" of a large tax return is nice and it came in especially handy this year to pay down my Discover card balance to zero. I will still get a federal refund of around $3,000 next year if I have calculated correctly. My state refund should again be in the $1,200 range. All in all, I should be able to have $200 more per month to save and still get total federal and state refunds of $4,200. That would be more than enough to pay off my car or my 401k loan next year.

Now that my credit card debt is almost gone I would like to focus more on my emergency cushion. My stretch goal is to have $15,000 of cash reserves by the end of 2008. I am not sure how achievable that goal is as I am on track to only have about $11,000 saved by the end of the year. If I get a bonus (which is a very big if) I would put 15% of it in my 401k and the rest in my savings. Supposing my bonus is $4,000, then an additional $600 would go into my 401k and about $2,000 after taxes would be available for savings. Last year my bonus was $7,000 but my firm had a very good year. I am not counting on a repeat 12% raise or a $7,000 bonus. My expectations are more in line with a 7% raise and if I am lucky, a $4,000 bonus.

A tax refund already!!!

This morning when I went online to check my bank account I saw that my state income tax refund of $1,215 had posted to my account. Hooray!

I promptly went online and made a $1,215 payment on the cash advance from my Citibank credit card. I double checked the status of my federal refund and the IRS website stated that I should receive it by February 12, 2008. That is pretty quick as I filed both my federal and state taxes less than one week ago. I am hoping to completely pay off the 0% balance on my Discover card and most of the remaining balance on my Citibank card this month.

For the first time since I can remember, I will have NO credit card debt and a little cushion in the bank.

I just filed my taxes electronically

This morning I was able to complete my federal and state income taxes in TaxCut and got them filed. I am expecting a $5,366 refund from my federal return and $1,215 from my state return. With all of the issues surrounding the AMT rules and how that may delay refunds I am curious how quickly I will see the money. I have every bit of it earmarked to pay off debt.

In trying to get to my Delta $25,000 threshold I spent more than normal in December and now the bill is coming due. In order to avoid the double billing interest hit that I would pay with Amex because I didn't pay off my full balance I took did a balance transfer from my Citibank MC. It cost me $75 but I figured that it was less than 2 months of interest on a high Amex balance. I will pay off my full Discover card balance and most of my Citibank balance by the end of February. I will still owe $845 on Citibank but I think I will be able to pay that off in March.

On another note I will be getting a refund of about $1,200 because I am having to cancel the vacation that I had already paid for due to personal reasons. I am still out the airfare but I can use my ticket for another trip less the $50 change fee. I am completely out of the other person's ticket. I may take that money and buy a new Apple laptop. I am not sure yet.

Estimated 2007 tax refunds

I have purchased Tax Cut and input the initial information that shows that my federal tax refund will be approximately $5,300. The state forms are not updated in Tax Cut yet but I went on the Georgia Department of revenue website and was able to determine that my state refund will be approximately $1,200. Both amounts are larger than last year’s refunds. I plan to use the entire amount to pay down debt. Most will go to the 0% balance on my Discover card but some will go to pay down my Amex. I loaded the Amex up to try to get the Medallion awards from Delta so my balance is $4,000.

I am disappointed about the possible delays in refunds this year due to the last minute changes to the AMT tax. I am really looking forward to paying down the credit card debt. I have written about tis before but I still considering changing my withholding so that I don’t give the free loan to Uncle Sam. I am going to run some numbers to see what my tax situation for 2008 looks like. It is nice to get those nice refunds but from a monthly budgeting perspective I could use the money in my paychecks. Having less withhold would let me save more each month in my emergency fund. My goal is to increase it to $15,000 by the end of 2008.

Tax Cut wins!

I decided to purchase Tax Cut again this year. I did try out Turbo Tax by downloading the software they sent me in the mail…unfortunately it caused an error in trying to tell me that I did not itemize last year which is not correct. Somehow it found my saved tax return on my computer. That error which would have made my 2007 income wrong by mischaracterizing my state income tax refund along with the difference in price was enough to send me back into the arms of Tax Cut. I purchased it at Best Buy for $69.99 which included the federal and state versions plus e-filing for both. The Tax Cut version that did not include e-file was $39.99. Turbo Tax does not have a version that includes e-filing (they charge an additional $17.95 per tax form) and the cost was $44.99. Once the e-file is included then Turbo Tax would have cost me $80. I have a $10 mail-in rebate for both Tax Cut and Turbo Tax. I know that price is not everything but my taxes are not complicated and the Turbo Tax version created an error so I am happy with my choice. Next year is another story.

Turbo Tax vs. Tax Cut

I am starting to think about purchasing tax software again. Last year I used Tax Cut because it was a little less expensive when I included the state return and electronic filing. I have read a few reviews comparing Turbo Tax and Tax Cut and Turbo Tax seems to be the better program. I had used Turbo Tax for years and when I switched to Tax Cut last year I did not notice any major differences. Both programs let me import directly from Quicken so the biggest difference for me was the price. That will probably be the same for me ths year. I am hoping to get at least a $5,000 refund from my federal taxes and $1,000 from my state taxes. That will allow me to pay off my credit card and have some left over for saving. I usually file as soon as I can, typically the first week or so of February. I have found that I can get my refund within 10 days or so by filing early.

Federal tax withholding

I am one of those people who would rather get a nice refund back at the end of the year. Many people will say that you are only giving an interest-free loan to the government if you get a large refund. To me it is a forced means of savings. I expect to get about $5,000 back from my federal tax refund and another $1,000 back from my state refund. The vast majority of that money is earmarked to payoff my credit cards balance which now sits at $5,880 at 0% interest and will be closer to $5,000 when I get my tax refunds. Anything leftover will go into my emergency savings or even my Roth IRA. I am considering changing my withholding for 2008 so that I can increase my 401k investments. I thought that I would be able to max out my 401k withholding this year but with the monthly credit card payment I just have not been able to. I cannot wait to get my hands on that money.

Savings and Taxes

I got paid today and was able to replace the savings that I had borrowed. For good measure I also deposited an additional $25 to pay interest to myself. Next month I am going to increase my monthly emergency savings deposit from $350 to $450. I wish I could grow it faster but that is the best I can do right now.
I was able to claim homestead exemption on my house so now my real estate taxes will be about $900 lower than last year. I expect to get a escrow refund from Chase at some point. I think I will take the $75 per month in escrow savings and put it towards my car loan or student loan debt. I plan to put any escrow refund into my savings