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Better than a CD
Posted: Wed Jan 20, 2021 8:32 pm
by olds442jetaway
It was just on the news that the IRS still has over 7 million unprocessed paper income tax returns from last year. They are begging people not to file paper tax returns this year. I like to file a paper tax return myself because at least I can understand the whos whats where’s and whys rather than just mindlessly typing or punching in a number. The other plus side if you don’t need the money right away is the IRS will pay you interest if you have a refund due of between three and 5% per year
Re: Better than a CD
Posted: Fri Jan 29, 2021 12:19 pm
by billryan
It would have to be an awfully big refund to make it worth the wait of a year or more to get it.
Re: Better than a CD
Posted: Fri Jan 29, 2021 5:05 pm
by olds442jetaway
True
Re: Better than a CD
Posted: Fri Jan 29, 2021 10:05 pm
by Jstark
If you get a refund, you're doing it wrong. You're better off owing and not giving the government an interest free loan.
Re: Better than a CD
Posted: Sat Jan 30, 2021 7:04 am
by wildman49
olds442jetaway wrote: ↑Wed Jan 20, 2021 8:32 pm
I like to file a paper tax return myself because at least I can understand the whos whats where’s and whys rather than just mindlessly typing or punching in a number. The other plus side if you don’t need the money right away is the IRS will pay you interest if you have a refund due of between three and 5% per year
I also like to use paper forms. Just don't like the software out there. I've done my own taxes for 42 years now. Not about to use a CD. I owe every year do to my poker winnings so it's in the mail in April with a check sent return card they must sign.
Re: Better than a CD
Posted: Sat Jan 30, 2021 7:49 am
by olds442jetaway
I am a carbon copy of Wildman above. The only difference is I have been doing my own returns for 55 years. Started at age 17. As to the refund issue, it depends. If you had planned to be under withheld and pay quarterly estimated tax or pay at the end of the year, that’s fine as long as you had planned to invest in investments with a return of 5 percent or greater. If you had planned to either blow your money or just dump it into checking or savings, it would be better to be over withheld, file a paper return, and hope they process it late therefore paying you the 3-5 percent from the due date. Be careful on oweing a ton at the end of the year. You could incur a substantial estimated tax penalty. Interest on your refund is taxable just like as if it was in the bank. IRS will send you a 1099 if it is over 10 bucks.
Re: Better than a CD
Posted: Sat Jan 30, 2021 8:03 am
by wildman49
olds442jetaway wrote: ↑Sat Jan 30, 2021 7:49 am
I am a carbon copy of Wildman above. The only difference is I have been doing my own returns for 55 years. Started at age 17. As to the refund issue, it depends. If you had planned to be under withheld and pay quarterly estimated tax or pay at the end of the year, that’s fine as long as you had planned to invest in investments with a return of 5 percent or greater. If you had planned to either blow your money or just dump it into checking or savings, it would be better to be over withheld, file a paper return, and hope they process it late therefore paying you the 3-5 percent from the due date. Be careful on oweing a ton at the end of the year. You could incur a substantial estimated tax penalty. Interest on your refund is taxable just like as if it was in the bank. IRS will send you a 1099 if it is over 10 bucks.
Olds I been doing a great juggling act with the IRS, never owing enough to pay a penalty. I did get hurt on the tax change from 12k to 24k on itemize form, that has me paying more in fed tax since I find it harder to get to the 24k and have to use casino write offs to get there.
Re: Better than a CD
Posted: Sat Jan 30, 2021 8:17 am
by dinghy
olds442jetaway wrote: ↑Sat Jan 30, 2021 7:49 am
As to the refund issue, it depends.
3%+ risk-free yield looks good to me. But if I understood correctly, this is not an ongoing opportunity. This year the filing deadline resets back to the usual April date, so I don't see any likelihood of substantially late payment issuance from the IRS.
Tax software can be frustrating, but I have a lot of stock transactions so paper would be cumbersome. The IRS already has all the information because it's reported to them by the brokerages, but I have to regurgitate it because reasons.
Re: Better than a CD
Posted: Sat Jan 30, 2021 8:57 am
by billryan
Normally, I would agree that being owed a big refund is a waste of your money, but in Las Vegas, there was a casino that gave you a bonus for cashing your tax check. I forget the details, and they changed it from year to year, but you could get up to a 50% bonus in free slot play, depending on how big your check was.
It's one thing when you work for a salary and have your taxes withheld for you, but many people make quarterly payments estimated on their income. It's not so easy then. I tend to err on the side of caution.
Getting a refund of a few thousand dollars is a small price to pay to avoid inadvertently getting audited.
Re: Better than a CD
Posted: Sat Jan 30, 2021 10:31 am
by jaycevs1
One additional item to consider is the amount of identity theft. I have had false returns, and a number of people I know. By filing earlier, the chance of a fraudulent return being accepted is reduced.