The Motley Fool Discussion Boards
Financial Planning / Tax Strategies
|Subject: Re: Pay/Refund||Date: 4/15/2008 3:51 PM|
|Author: NaggingFool||Number: 100384 of 122998|
Try using numbers.
Scenario 1 - You have an extra $200 withheld in taxes each month.
After you file you get a check for $2400.
Scenario 2 - You put that money into a high-yield savings account for the year (I'm estimating 3% for these scenarios). It's available for emergencies, and if you don't need it for the emergencies come tax day you'll have $2448 or so in there.
Scenario 3 - You lower your withholding to keep you just inside the safe harbor. Then, after you pay your $900 tax bill in April you'll have $2,466 in the savings account.
I might try convincing her to direct deposit some amount of her paycheck (many employers let you split the direct deposit) to a savings account -- you can let her call it her tax refund account.
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