Want an iPad with that Refund?

April 9, 2010 by  
Filed under Spending, Taxes

Tax day is bearing down on us which brings us into tax refund season. We are also in new season of gadget lust. This one is the iPad edition. I’m not receiving a tax refund, which is a good thing. (Why? Because it means I didn’t extend an interest-free loan to our money-sucking government.) I’m also not buying an iPad, also a good thing. (Why? Because it shows I’m not an Apple fanboy.)

I’m curious about what folks will do with their tax refunds in these challenging economic times.

I can’t generalize and call refund recipients “taxpayers” because almost half of U.S. households don’t pay income taxes. (Source)  Many of the non-taxpayers will still receive refunds because of the plethora of refundable tax credits a/k/a income re-distribution channels that Congress is creating. It is misleading for a non-taxpayer to even refer to their check from the IRS as a “refund.” It’s actually a gift – from the real taxpayers. You are welcome. (Mr. ToughMonelyLove says with a tinge of sarcasm.)

Bankrate.com surveyed tax filers about their plans for their refund.  30% said they would pay down debt (good), 28% will save or invest (also good), and 26% will buy food or pay utility bills (what?). (Source)

I don’t trust that last 26% number. Do those refund recipients plan on eating more food during refund season? Will they be adjusting their thermostat to a more costly setting?

I think the “buy food with my refund” folks have already spent their refund, in anticipation of receiving it. Maybe they bought something they didn’t need. (An iPad perhaps?) This left them a little short in the “food” and “utilities” categories. That’s what I’m thinking.

But then Mr. ToughMoneyLove is a diehard cynic.

What do you think?


Feed Mr. ToughMoneyLove

FREE UPDATES: If you enjoyed this, please subscribe to receive the newest hard truth from Mr. ToughMoneyLove automatically by RSS feed (what is RSS?) or by spam-free Email.

Share
  • Banner

Comments

4 Responses to “Want an iPad with that Refund?”
  1. Damilola says:

    I’ll admit that taxes and how to reduce the amount of refunds you get is not my strong point when it comes to personal finance. I always assumed that people who made less (a graduate student like me) usually received a refund. I would definitely be interested in the fine points of this though.
    What am I going to do with my refund? I made a v-log about it on on my blog but I will be buying a ring so I can have my very own Mrs. Tough Money Love 😀

  2. David says:

    Last year I did not get a refund, but this year I did. It went into savings and was not spent on stuff that I don’t need. An iPad is definitely something that I do not need! I am quite content with a laptop and a BlackBerry.

  3. kitty says:

    Reducing the amount of refunds is difficult in situations when you aren’t 100% sure what your income will be.

    I owe money this year – sold a chunk of ESPP stock as part of my plan to reduce the amount I have.

    But whether or not I’ll get a refund next year will solely depends on if and how many shares of ESPP stock I’ll sell as well as other potential capital gains/losses. Since I sold last year, I would no longer have “safe harbor” to avoid penalty unless I have at least 110% of last year taxes withheld (given how high my income was with these capital gains). But if I don’t sell any ESPP stock for some reason or get less in capital gains then I’ll overpay. Since I may sell something as late as December, it’s really difficult to predict.

    I had a similar situation in 2008: I sold some ESPP stock with gains in 2007 and planned to sell some in 2008. But in 2008 I didn’t do it. So I got a large refund.

    As to what I do with refund – just goes into savings with the rest of my money. It’s simply too small an amount to be considered “windfall”; I could spend the same amount tomorrow if I really wanted or needed something. Besides, money is money whether it comes in form of refund or not, so if I don’t plan on spending it without the refund, why would I use refund for it?

  4. MasterPo says:

    Used my Fed refund to pay my state taxes. :-(

    The rest has been banked for a project I hope will come through this year. And if not, there are worse things than having it in a tax-free MMF.

Speak Your Mind

Please leave a comment and tell us your version of the hard truth...

You must be logged in to post a comment.