Is It Automatic You Spending Tax Refund on Gear?

[Stonedtone]

Gotcha. That's cool. I have my job the minimum every year, and I still get a refund. Never understood why everyone doesn't do that...

 

 

some people use the refund like a savings account. They can't do the savings thing, so they have the gov do it

[Cougar Hunter]

I owed a {censored} ton, yet I still just bought:

 

Strymon Timeline

T-Rex Chameleon power supply

SUF 2247 Muff

SUF Kit Rae Muff

SUF '75 Violet Ram's Head

PCE Aluminum Falcon Klon Clone

[RSBro]

 

dafuq is a DIF score

 

 

Basically a "scorecard" for your FIT return. If you ever got audited you can do a FOIA request for it on whatever years are under review and probably can for any year now that I think about it. It doesn't help because you already are under review but you can still see it's there and is a real "thing". :-/

I don't know who published this article or if all of it is right/wrong but I will say there is an "art" to the presentation of a return, like they reference in the odd # vs. big flat even # thing for line-item Expenses.

 

 

This misconception, started a few years ago by another tax author, was based on an erroneous assumption about the IRS's computer system. During the processing routine all tax returns are scored or rated for audit potential under IRS's top secret computer program called DIF, for Discriminant Function. The higher the DIF score, the greater the potential of bringing in additional taxes under the audit. The IRS strives to audit the higher-scored returns first BECAUSE of the expectation of getting more revenue for government coffers. DIF scores are developed from an analysis of a series (involving up to 50,000 randomly selected returns) of intensive audits, conducted every few years, called the Taxpayer Compliance Measurement Program (TCMP). In a TCMP audit, the IRS will analyze every item on the tax return, including proof of income. (DIF scores therefore reflect correlated averages found on a cross-section of tax returns.) The assumption behind this misconception is that a cut-off score of 240 may be the high cut-off score in February when fewer returns are filed, but 260 may be the cut-off score in April when more returns are filed. Therefore, if your DIF score is somewhere between 240 and 260, then your chances of being audited are lessened by filing in April when everyone else files. This misconception is based on a poor understanding of how returns are selected for audit. The selection process does not even begin until after the end of June, over two months past the end of the April 15 deadline. The first step occurs when computer-selected returns are arranged in batches of examination class, a method used to categorize returns by the amount of income reported. All returns are placed into one of 12 classes based on their total positive income (TPI) for individuals or total gross receipts (TGR) for businesses. (See Exhibit 5-3 in Chapter 5 for a breakdown of each TPI and TGR category, the number and percentage of returns audited and the average tax and penalty recommended per return in each category.) Throughout the year, district IRS offices place orders with the IRS service centers for returns to audit. The service center then pulls those returns that are above a specific DIF cutoff score and sends them to the district office. Districts are required to order returns numerous times over a twelve-month period so that all tax returns, regardless of their filing date, have an equal chance of being delivered to the district for classification,a manual selection procedure performed by revenue agents called classifiers. Another aspect of the selection system is the actual classification process. The IRS requires that the highest DIF scores within each examination class be pulled and manually screened for audit potential by the classifier. A high DIF score is "any return with a score above the median score delivered for each examination class." If it appears to the classifier that the tax return is in order or that you have included sufficient substantiating or appropriate documentation with the return, the return will most likely be sent back to the service center without being audited. The classifier relies of his or her experience, judgment, and instincts to analyze the returns to find the ones with the greatest likelihood of change. This interesting part of this whole process is that while the classifier receives a high Dif-Score return, the various items on the return that resulted in the high DIF score are not identified. Therefore, the classifier must decide what items on the tax return will be questioned during the audit. More than any other non-DIF factor, the classifier's decision is the most significant variable in the selection process. See Exhibit 0-1 for IRS guidelines to classifiers on how to identify significant issues when selecting returns for audit. Agents with classification experience have stated that subjective factors frequently enter into the selection process. For example, one classifier selected returns that were sloppily prepared, or ones that had a lot of rounded numbers in the expense columns (for example, $25,000 for travel expenses instead of $24,679). Another agent stated he selected returns that were prepared by certain commercial tax preparers.

 

[sleewell]

Fact: dolf is not reading all that ^

[Dolf]

Word, I did some quick interweb recon after I asked because a well informed individual is a less-likely-to-be-blindsided individual

 

 

Basically a "scorecard" for your FIT return. If you ever got audited you can do a FOIA request for it on whatever years are under review and probably can for any year now that I think about it. It doesn't help because you already are under review but you can still see it's there and is a real "thing". :-/ I don't know who published this article or if all of it is right/wrong but I will say there is an "art" to the presentation of a return, like they reference in the odd # vs. big flat even # thing for line-item Expenses.

 

[eudaimonia02912]

I didn't spend any of my refund on gear. Never have.

[Brown Rug]

Probably yes, as foolish as it probably will be.

[diocide]

 

some people use the refund like a savings account. They can't do the savings thing, so they have the gov do it

 

 

Yeah, I guess that's one way to look at it. I guess if you're not good at saving, it's one way to do it.

[guitarbilly74]

No, my tax return has been routinely going towards the principle of my mortgage for the last 10 years. I sometimes set 100-200 dollars aside to buy something small, but most of it goes to the mortgage. For the last year, however, I adjusted my deductions so I don't get a return or own anything significant at the end of the year.

[duncan]

 

I"m a saver too, but that's kind of irrelevant. My point is, why let the government effectively open a saving acct for you, with NO interest, that you can only access once a year? And an actual bonus is not equal to an income tax refund.

 

 

 

lol how much interest do you think you'd earn on $1000?

[SnowStorm]

I really hope not but I've been posting many threads about guitars I want and I'm also thinking I want a Fulltone OCD. Trying to hold off of everything is hard as possible.

[Dolf]

it will finish paying off our cars and probably buy something for my daughter.

[diocide]

 

lol how much interest do you think you'd earn on $1000?

 

 

I'm not saying you have to save it in a savings account. Could be CD's, could be stocks, could be home improvements, could be towards a new vehicle, could be an extra mortgage payment....

[Ron Burgandy]

lol how much interest do you think you'd earn on $1000?

 

 

hundreds

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

of pennies

[RSBro]

Word, I did some quick interweb recon after I asked because a well informed individual is a less-likely-to-be-blindsided individual I read everything he wrote.

 

it's not something to worry about but i don't understand why the OP if he's working 1099 and needs to pay in E-S taxes against such wouldn't just credit those forward so you don't have to pay in as much for 2012 but it's not me, so

[Ron Burgandy]

lol well as with most things pertaining to this, there isn't just "tl;dr" version brah... it's not something to worry about but i don't understand why the OP if he's working 1099 and needs to pay in E-S taxes against such wouldn't just credit those forward so you don't have to pay in as much for 2012 but it's not me, so

when my wife was 1099 in college it always cost me a {censored} ton. Self employment tax alone was a beating, especially considering how little she earned working part time doing medical transcription.

mortgage interest never netted me back up beyond what I would have gotten back by myself. However, we had to file joint to get her student credit. sigh, was a pain.

[RSBro]

when my wife was 1099 in college it always cost me a {censored} ton. Self employment tax alone was a beating, especially considering how little she earned working part time doing medical transcription. mortgage interest never netted me back up beyond what I would have gotten back by myself. However, we had to file joint to get her student credit. sigh, was a pain.

 

progressive tax system is designed for lose/lose brah can't beat it

 

having a guesstimate for what you make, if you were single you probably would be paying AMT tax as well, since those thresholds came down either in '10 IIRC. AMT is figuring an additional tax aside from your regular IT and saying well let's see which of these is higher.... :love:

[Kenny Powers]

OP is getting back $13k. That's a little more than $38 per paycheck

 

that was my bad, I only saw the $1k he initially wrote

That said, accounting for that high of a return, the guy must have some insane credits, like a lot of kids, house, whatever. Trying to calculate your with holdings based on potential credits could be very {censored}ing dangerous.

[pioneerprogress]

lol how much interest do you think you'd earn on $1000?

 

I tried that last year.

After my tax refund last year, I deposited the whole thing in addition to what I had in regular savings. Just over $10,000 in the account. I didn't touch it for six weeks so I could see what a full month's interest would be.

It was less than a dollar

I've done it both ways, and I choose getting a refund. Why? In my budget, every dollar has a name. That extra 20 dollars a week or whatever it is if I claimed an additional exemption, would not be put to much good use. Monthly budget would see something like 20 bucks each extra in savings, spending money, groceries, and/or some other random category.

Instead, I plan to make larger purchases in the spring each year. Sure, I give up entire DOLLARS worth of interest () but then I get to use it however I see fit instead of random meaningless budget adjustments or having it being nickeled and dimed and eaten up by the end of the year by random expenses, which is exactly what would happen, instead of buying our travel trailer, or getting our patio, etc. etc.

[Kenny Powers]

I have a, and I quote, "high yield interest, cash maximizer account" with BOA. I wont go into how much I have in there, but I am about to put 20% down on my home... anyways you want to know how much I am seeing each month? $11...

 

and looking at the best CD rates... 1.08% with a $25k minimum deposit. LOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOL

[Les-Zombie]

Im getting some money back but im gonna put it back in my bank account, im not in a spending mood.

 

I never understood why everybody wants to spend their money as soon as they get it.

 

Iif you couldnt afford it before you get your refund then you should really skip buying it and just save your money incase you need some cash for an emergency.

 

Too often we see spam threads where a dude got back 2k from a tax refund and bought a amp and then a month later their cat needs a surgury and they have too sell the amp because they cant afford it anymore.

[The Anomaly]

 

im getting some money back but im gonna put it back in my bank account, im not in a spending mood. i never understood why everybody wants to spend their money as soon as they get it. if you couldnt afford it before you get your refund then you should really skip buying it and just save your money incase you need it.

 

 

GTFO.

[diocide]

So? You mention in another post investing in stocks, CD's etc. Ok well thats fine if you have the lump sum up front. Not to mention you will have to wait a year before you can touch a CD . For the stocks, are you going to buy A stock each pay check, and PRAY that it doesnt decrease? I get it, you want to try to "stick it to the man, before he sticks you!" But I am willing to wager that are not in a position where you are benefiting in one way shape or form from choosing either direction. Instead you are just vomiting what other people have said... that was my bad, I only saw the $1k he initially wrote That said, accounting for that high of a return, the guy must have some insane credits, like a lot of kids, house, whatever. Trying to calculate your with holdings based on potential credits could be very {censored}ing dangerous.

 

I'm not trying to stick it to the government, or vomiting back something I've heard. I just think if you're a fiscally repsonisble person, you can find more productive things to do with your own money, than letting the government sit on it. {censored}, I'd rather have it under my bed than in the coffers.

[RSBro]

 

I'm not trying to stick it to the government, or vomiting back something I've heard. I just think if you're a fiscally repsonisble person, you can find more productive things to do with your own money, than letting the government sit on it. {censored}, I'd rather have it under my bed than in the coffers.

 

 

That's kinda how I do it... my goal is to be at $0 or get back/owe under $100. With my music deductions I really only need to pay in less than 1/2 of what would be withheld each month so I just do quarterly E-S payments and I've gotten pretty good at it. Of course, I'm into this sorta thing and it's fun (sick, yes but still fun lol) for tax nerds like moi` to play that game each year and see how close I can get to $0 so eh, whatevs. One day I'm sure I'll have more important things to worry about and won't bother with this method.

[Matt Gnarly]

My mom likes sending me cheesy emails, this one was kind of funny and fitting.

After filing their personal tax returns by April 30th, many Canadians will again receive a tax refund. This is indeed a very exciting program, and I'll explain it in a Q & A format: Q. What is a tax refund payment? A. It