Am I getting too much money back from my tax return?

How many exemptions did you put on your W4? You can go down from 1 to 0 to have the use of more of your money during the year. Why give the government an interest-free loan?

i wont not raise any question when i have extra bucks in my pocket. Nothing was deducted from my salary for the first 2 months in terms of gov tax. IM glad that i have extra 600 quid to spend.

No one can really say it’s normal without looking at your exact finances. Anyone making a guess is doing just that, making a guess, and I highly recommend you do not make your judgment based on someone on the Internet’s guess, because only you will be liable for the tax money.

Basically, if you have no dependents, are single, and if your company took out more tax than you really needed to pay, then yes, getting back $2000 is not unfathomable. But a big return is also a good sign that some error has been made, and it’s well worth your time and money to take another comb through it.

It’s well worth sorting it out now, compared to assuming the money is yours and then being surprised when they come calling for it. I had just such an experience (note: I’m Canadian, so totally different financial process etc), where I trusted H&R Block to file our taxes, and sure enough they made a mistake which gave us an extra two grand immediately, but of course the Canadian government came calling for it back a few months later. It was very inopportune.

Without looking at your documents it is just a guess. But I got back 400$ in Federal and about 150$ in State in 2001 on a income of 12k for the year. So it is within reason.

But it wouldn’t hurt to have someone look over things.

@Marina, lurve to you. Your questions (comment) about, “why give the government an interest-free loan?” is fantastic! I know people like to get money back, it’s far better than paying; however, it is much better when the person gets that money, thorughout the year, versus the government using it – interest free!

Lurve!!!

@cak…. If estimating your taxes was precise I would agree. But most people don’t save up. It would be easy to end up owing and unfortunately most people aren’t prepared for that.

If I had that extra 2k I would probably spend it. And then I end up owing a grand. But now I don’t have it. I would rather not worry about it and let the government earn a few percent.

It would be different if we were a nation of savers. But we aren’t. A unexpected two or three thousand dollar bill would be bad for a lot of families out there.

How much you get back is not a function of how much money you make. It is a function of two things…how much tax did you actually owe vs. how much money did you have withheld. Let’s look at 37k in income. If you are single, no kids, not “head of household”, basically you get a personal exemption of $3,500 and a standard deduction of $5,450, which means your taxable income is only $28,050.00. The first $8,025.00 is taxed at 10% and the next $20,025.00 is taxed at 15%, meaning your tax liability is $3,806.50. That is the MOST someone who makes $37k a year would have to pay in taxes.

So, was $5,800 withheld from your checks for federal taxes? If not, look at what other exemptions and dedcutions you might have gotten. Do you have any kids? Do you contribute to a 401(k)? Do you own a home? Do you have a home based business that you are taking expenses for? Do you itemize or take the standard deduction? Are you blind? Are you responsible for any dependents? Do you have tax credits for school? I would say, if the instructions say you qualify for something, take it, and if there is any doubt, call the IRS helpline and ask if your situation applies. You are probably fine.

@johnpowell – there are a few ways that can help someone. A good tax person can help you raise your deductions, within reason, and you can still get “something” back, but not the 2k.

I remember times when I got 2 & 3 grand back – it was fun. I guess, though, my money strategies changed as I got older and I really started focusing on how to use my money, the best way possible.

(but I remember a great trip or two, spur of the moment on those tax returns!)

You are correct, though – if you estimate and file that way – where you possibly will need to pay in the end, is difficult for a lot of families (and single people)!

As dalepetrie has so ably and thoroughly pointed out, it is not a mystery in which you have to guess. It can be calculated, thus, no bad surprises—unless your yearly income is highly variable.

As noted, the thing that really matters is the relationship between your income and how much money you’re paying in taxes—the amount of money that is withheld is something you can set up, and the usual formulas are set up to be very conservative. If you think you’re getting too much money back, you should go to the payroll office and have your withholding adjusted.

I agree with @marina’s theory about not giving the government an interest-free loan—but practically speaking I’m in @johnpowell‘s camp. I have an extra $100 withheld per paycheck, so when I do my taxes, I get $2400 on top of my tax refund. It means that February tends to be a flush month where I pay off my credit cards completely and make major purchases.

I am good at financial planning in theory, but horrible at having the combination of memory and willpower to carry out the plans. So anything that I can set up and forget is much better for me than something I have to do actively.

(And my taxes are going to get more complicated this year. I’m thinking about buying a condo, which has about a 90% chance of happening, and thinking about starting a side business, which has about a 30–40% chance of happening.)