Your Money as Lottery Winnings

sdsester

Just got done filling out and sending all the 1099s I owe independent contractors that worked for me last year. I don't do under the table. Up to them whether they want to claim the income.

This time of year and the ads amaze me. People wave giant refunds around like they won the lottery.

"I got $8,000 back thanks to HR Block, or whomever."

Let me ask you something, any of you? I am a nice trust worthy guy. Could I borrow $8,000 from you in 2012? I can pay you back sometime in the first, second or third quarter of 2013---whenever I can get around to cutting checks. I was sort of hoping we could do this as a no interest sort of thing? I take the $8K, spend it in Afghanistan or even on political campaigns.

Come on people, wake up. If you are getting those kind of refunds, you are having too much deducted from your checks. You anti-government tea party people should be all over this.

Change your W-2 witholding statements. Noone should revel in getting their own money back, without interest paid on it.

Ask your HR Block or whomever person how to adjust your witholdings so you get your lottery winnings, through the year, when you really need them. When you think about it? You should owe nothing when filing a tax return right? Or maybe just a bit.

mickey cassiba

Ahh, but you forgot about "Earned Income Credit', that magic line that allows some folks to recieve money they did not pay into the systen. Didja hear the gubmint was goin' broke? I think I found one of the leaks

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Mickey

One of these hammers will fix it.

hyunelan2

I had two kids this year. Life got really busy, really fast and I never adjusted my withholdings, then forgot about it. I knew that I was withholding a little too much before the kids (new house with higher real estate taxes to deduct), but after the extra tax deductions for two kids - holy cow. I started figuring out my taxes and was like "son of a ..." Already filled out a new form and gave it to HR, which took effect on my last paycheck. The difference in my take-home is big enough to cover my truck payment, and then some.

Like the OP alluded to, it's much better to get that money during the year. Even if you're one of those people who like to get a big check once a year, put it in an account you only touch in April. You are losing out on even more "free money" from potential interest by using the "forced savings account" by the IRS. If you get a $8K check (from OP's example), divided evenly among bi-weekly paychecks and put into an account at 4.25% (what my checking account is), that's another $364.41 in interest earned over the year. That's like someone asking you, would you like a free $364? "No thanks, I don't like having more money."

sixeightten

The earned income credit can be received in advance also.

I doubt this mindset will ever change.

jbfan

I used to do that, man was I dumb?

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Yes I am a Pirate, 200 years too late. "Jimmy Buffett"

CoconutPete

I get a little back every year, but I'm too lazy to aim for zero. A check is fun, but I don't expect 1000's.

titanoman

I haven't gotten a refund since 1996.
I tried a partnership with my best friend (don't ever do that) for 2 years
(Calimen Construction, because we were 2 men from Cali.).
I was in charge of hiring and firing, Tim was supposed to handle payroll and taxes.
We averaged 2 4 man crews and built 6 houses 2 at a time.
Anyway, Tim didn't take out nearly enough from the guy's checks. They didn't get any refunds except RC or renters credits and everybody was like, "ooh man. No refund this year".
Also, my partner failed to pay into medicare and FICA as well.
So in 2 years we racked up $15,000 in debt somehow, which I've been paying for every since, long after the partnership was dissolved.
And it ruined our friendship forever.
That was in '96.
After that experience I worked by the hour as a lead carpenter or foreman up until I got hurt.
Less headache and no hustling to keep your guys busy.
Owning your own company feels good if you are a savvy businessman, but you can get in a lot of trouble real quick if, really, you're just a carpenter or whatever your trade.
Heck, you end up just making a decent wage anyway.
Anyway, have fun with those 1099's.

bikerpowell

couldn't agree with you more!

47howard

So true, it's sad that people really think that they gained so much money back this time of the year. Stupidity....

ElectricMD

I think getting it all back at once can be bad, most people tend to blow it on a new TV or something they don't REALLY need instead of making their normal everyday life slightly more comfortable bit by bit along the way