Tax Return Help

[dmd20000]

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Hey guys, I thought putting 10k in my employer's 401k will help me get a higher refund but it didn't seem to affect it at all. People here were saying to maximize 401k but how is it going to help if we make over 150k? Am I doing something wrong?

 

[HouTX]

you know how you get a bigger refund? u withhold more. contributing to a 401k is to lower your tax liability.

 

[confettiflyer]

Higher refund? Why would you want to give the gov't a bigger interest free loan than?

401k contributions defer your tax liabilities, decreasing your taxable income (and therefore, tax, for the year) Be happy about that. Refund is merely a function of your overpayments on withholding.


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[Chalupa_Batman86]

A higher refund doesn't mean anything. It may seem nice to have a check coming your way, but that's a consequence of the government having loan free access to your hard earned money.

 

[npage148]

How much would you really earn over the year from that 1000$ refund? Sure it's an interest free loan to the govt but you are not exactly losing a ton of money. Think of it as a small price for them to save for you

 

[Dr Wario]

I believe the answer the OP is seeking is as such, putting additional money into your 401k does indeed reduce your overall tax liability, however you will not get a bigger refund because your employer is simply withholding less taxes from each of your paychecks. As others have stated, your primary goal should be to reduce your overall tax liability, not increasing your refund. That said, if you want to increase your refund there are two ways to do it, one is to have your employer withold more from each of your paychecks, or increase your tax deductions that the employer does not account for (ie home mortgage interest, dependents, business expenses etc).

 

[Dred Pirate]

How much would you really earn over the year from that 1000$ refund? Sure it's an interest free loan to the govt but you are not exactly losing a ton of money. Think of it as a small price for them to save for you

agree completely, but for me it is sort of the principle of the fact

 

[BenJammin]

Why on earth would you want a high refund? My ideal refund during tax season is zero.

 

[confettiflyer]

How much would you really earn over the year from that 1000$ refund? Sure it's an interest free loan to the govt but you are not exactly losing a ton of money. Think of it as a small price for them to save for you

That's what Big Brother wants all of us to think.

Haha, okay tin foil hat off. I withhold to a small payment each year primarily for fraud reasons. If someone fraudulently files a return early and claims a refund, my return and refund are tied up for like an extra 6-12 months. At least if I have no refund due, I'll get to it...eventually.

The IRS really hasn't done much to combat the fraudulent return issue.


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