Who's getting a big tax refund this year?

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ctbaars

Golden Member
Nov 4, 2009
1,557
96
106
#76
Inherited money isn't federally taxable. You don't even have to report it on your return.
That depends. As I found out. You must pay tax on Inherited IRA's distributions which must be taken.
 
Dec 10, 2005
19,281
147
126
#77
That depends. As I found out. You must pay tax on Inherited IRA's distributions which must be taken.
Yes, but you can keep the IRA as a beneficiary IRA, so it can continue to grow tax free over your own lifetime even as you take the yearly required minimum distribution.
 

Kaido

Elite Member & Kitchen Overlord
Feb 14, 2004
42,740
250
126
#78
We actually both still get a monthly allowance so we can spend it on whatever we want without asking the other person or them flipping out. So if she goes and buys a new purse with it it doesn't bother me. Same when I spend an "unnecessary amount" on speakers (as if there was such a thing).
Yeah, I do the same. AMEX Serve cards, his & hers, with a weekly allowance. The two basic rules of personal finance I follow are:
  1. You can buy anything you can responsibly afford (training video, lol)
  2. Spend less than you make, i.e. "live below your means"
My split is pretty much:
  1. Auto billpay (bills, savings, etc.)
  2. Budget targets for variable groups (ex. a target "bucket" amount for the weekly food budget)
  3. Automated savings programs for various items (ex. "New Every 2" computer-savings program, vacations, big-ticket items like replacing major appliances, etc.)
  4. Weekly allowances per person (buying electronic toys, going out to lunch, etc.)
System protection-wise:
  1. Standard bank account (I don't use the debit card at all, for safety)
  2. Credit card for online purchases, which gets paid off every month
  3. Credit card for IRL purchases, which gets paid off every month (easy to track meatspace vs. virtual purchases, especially in case any fraud occurs)
  4. Online savings accounts for "personal layaway" projects (vacations, equipment purchases, etc.)
Allowed debt:
  1. Reasonable home
  2. Reasonable car
  3. Reasonable education loans
  4. Necessary medical fees
I'm a big fan of putting recurring systems on autopilot & really don't like having to think about my finances, so I've found this structure to be a pretty good setup for me. Stuff like expensive toy acquisition & vacations take a little bit longer to save up for, but then it's a zero-debt kind of situation. Sometimes debt happens due uncontrolled & unforeseen circumstances, like if you get whacked with a mountain of medical bills, but I've seen way too many people in my life get trapped by self-imposed debt. At a previous job, I had a coworker who was making in excess of $100k (probably closer to $150k) a year & had to continually mooch off of us when we went out to lunch because he had allowed lifestyle creep to eat his budget to the point where he was literally living paycheck to paycheck. Again, sometimes you get screwed by life & end up with unexpected debt, but in like 99% of the cases, it's through poor decision-making & lack of a solid system that prevents those types of situations from happening.

Plus, the nice thing about America is that no one is forcing you into any particular job. You can get as much education as you're willing to pursue & work as much as you want. You can pick up side gigs with Uber or Amazon Flex or any local fast-food restaurant if you need the extra cash. There's always ways to manage difficult living situations, if you're willing to think about & work on your problems & have a work ethic to push through & get yourself to where you need to be. I've always been very inspired by the story of a lady from my first job out of college - she worked in sales there right out of high school for over ten years & had maxed out at like $13 an hour, as a single adult living on her own, and spend over a decade after that taking one night class a time to get into the nursing field, which eventually got her a $70k/yr job.

Aside from math being hard for a lot of the population, I think (1) not having a solid work ethic & being willing to do what it takes to dig yourself out of a bad situation, and (2) not having a solid system setup, and an understanding of a good system (like mine, listed above), are probably the two biggest impediments that people have. In certain cases, you have a medical or mental condition that prevents you from doing higher-paying work, or you have a situation out of your control, like required medical costs, but outside of that, I think it mostly boils down to being will to work & being willing to create & stick to a good financial management system. It's not rocket science...I barely ever touch my financial system, outside of about a minute per day just to review all of the accounts to make sure everything is on track & nothing weird is going on...but it's a pretty big barrier for a lot of people if you've never done it before. Even to get it as simple as I have it above took many years of tinkering & testing to see what worked & what didn't.

And of course, you can grow things out as much as you want - churning, investments, etc. The key, for me at least, is having a solid system in place that allows you to easily meet your goals. That's why I like having weekly allowances on separate SERVE cards...I don't have to worry about overdrafts or over-spending or having to justify purchases with my S.O. or anything like that. I mean, ideally I'd just make bank & not have to worry about any of this, but I chose to shift into a job that pays less but is way more fulfilling on a daily basis, so having a system setup to deal with the reality of my finances makes life a lot easier, haha.
 

dud

Diamond Member
Feb 18, 2001
7,605
19
91
#82
If you are getting a "large" (define large) refund then you are doing it wrong. I usually get about $1K back each year but I started contributing to a Roth 401K at work about 4 months ago so I expect my taxes to go up ... and my normal refund to evaporate.

Note: If you are saving for retirement and are NOT investing in both a Roth IRA and Roth 401K then consider it. The more tax-free money in retirement the better ...
 

dud

Diamond Member
Feb 18, 2001
7,605
19
91
#83
Distributions from an inherited Roth IRA are not taxable.

This is true but ...

If you inherited a traditional IRA and the deceased was taking distributions then you too must take distributions (at your own rate) and pay taxes on the money as if it were income. The post you quoted makes no mention of the IRA being a Roth ...
 
Nov 8, 2012
12,094
1,588
126
#84
Yes. I have self-employment income that no taxes were paid (soccer referee)
That and 1099-int's. I don't think I'm over 10% of what I paid so then there's no penalty. Maybe ... Last year I did from a large IIRA distribution. I don't have that this year.
You know, I understand the point of penalty for witholding taxes - but what do they expect for a large sum of 1099-INTs?

Let's say I withold perfect. $0 owed via payroll tax witholding. BUT. Lets say I have enough 1099-INTs to put me over the 10%. Can you really get penalized for that? Seems crazy to me for them to expect people to go onto the IRS website and pay a random tax amount everytime my bank deposits interest.

For reference, I'm going to have something like... $2500 in 1099-INTs this year. I love playing the game where I open a bank account for a $300-500 bonus, get the bonus, then close the account out. My point being it's very easy for me to get to that 10% penalty with the amount of interest.
 
Last edited:
Nov 8, 2012
12,094
1,588
126
#85
Nope.

Got some money from an uncles will. Will be paying a couple grand to the fed.
Hasn't that money already been taxed? Assuming it's a reasonable low amount, I wouldn't think gift tax would apply?

EDIT: Nvm, Allisolm beat me to it.

Inherited money isn't federally taxable. You don't even have to report it on your return.
 
Nov 8, 2012
12,094
1,588
126
#86
Yeah, I do the same. AMEX Serve cards, his & hers, with a weekly allowance. The two basic rules of personal finance I follow are:
  1. You can buy anything you can responsibly afford (training video, lol)
  2. Spend less than you make, i.e. "live below your means"
My split is pretty much:
  1. Auto billpay (bills, savings, etc.)
  2. Budget targets for variable groups (ex. a target "bucket" amount for the weekly food budget)
  3. Automated savings programs for various items (ex. "New Every 2" computer-savings program, vacations, big-ticket items like replacing major appliances, etc.)
  4. Weekly allowances per person (buying electronic toys, going out to lunch, etc.)
System protection-wise:
  1. Standard bank account (I don't use the debit card at all, for safety)
  2. Credit card for online purchases, which gets paid off every month
  3. Credit card for IRL purchases, which gets paid off every month (easy to track meatspace vs. virtual purchases, especially in case any fraud occurs)
  4. Online savings accounts for "personal layaway" projects (vacations, equipment purchases, etc.)
Allowed debt:
  1. Reasonable home
  2. Reasonable car
  3. Reasonable education loans
  4. Necessary medical fees
I'm a big fan of putting recurring systems on autopilot & really don't like having to think about my finances, so I've found this structure to be a pretty good setup for me. Stuff like expensive toy acquisition & vacations take a little bit longer to save up for, but then it's a zero-debt kind of situation. Sometimes debt happens due uncontrolled & unforeseen circumstances, like if you get whacked with a mountain of medical bills, but I've seen way too many people in my life get trapped by self-imposed debt. At a previous job, I had a coworker who was making in excess of $100k (probably closer to $150k) a year & had to continually mooch off of us when we went out to lunch because he had allowed lifestyle creep to eat his budget to the point where he was literally living paycheck to paycheck. Again, sometimes you get screwed by life & end up with unexpected debt, but in like 99% of the cases, it's through poor decision-making & lack of a solid system that prevents those types of situations from happening.

Plus, the nice thing about America is that no one is forcing you into any particular job. You can get as much education as you're willing to pursue & work as much as you want. You can pick up side gigs with Uber or Amazon Flex or any local fast-food restaurant if you need the extra cash. There's always ways to manage difficult living situations, if you're willing to think about & work on your problems & have a work ethic to push through & get yourself to where you need to be. I've always been very inspired by the story of a lady from my first job out of college - she worked in sales there right out of high school for over ten years & had maxed out at like $13 an hour, as a single adult living on her own, and spend over a decade after that taking one night class a time to get into the nursing field, which eventually got her a $70k/yr job.

Aside from math being hard for a lot of the population, I think (1) not having a solid work ethic & being willing to do what it takes to dig yourself out of a bad situation, and (2) not having a solid system setup, and an understanding of a good system (like mine, listed above), are probably the two biggest impediments that people have. In certain cases, you have a medical or mental condition that prevents you from doing higher-paying work, or you have a situation out of your control, like required medical costs, but outside of that, I think it mostly boils down to being will to work & being willing to create & stick to a good financial management system. It's not rocket science...I barely ever touch my financial system, outside of about a minute per day just to review all of the accounts to make sure everything is on track & nothing weird is going on...but it's a pretty big barrier for a lot of people if you've never done it before. Even to get it as simple as I have it above took many years of tinkering & testing to see what worked & what didn't.

And of course, you can grow things out as much as you want - churning, investments, etc. The key, for me at least, is having a solid system in place that allows you to easily meet your goals. That's why I like having weekly allowances on separate SERVE cards...I don't have to worry about overdrafts or over-spending or having to justify purchases with my S.O. or anything like that. I mean, ideally I'd just make bank & not have to worry about any of this, but I chose to shift into a job that pays less but is way more fulfilling on a daily basis, so having a system setup to deal with the reality of my finances makes life a lot easier, haha.
You're getting way too much into the weeds.

The problem is simple: Keeping up with the Jones.

Everyone convinced themselves they NEED a new car every 3 years. They NEED a house that is $600k. They NEED new shoes. They NEED a new purse. They MUST go shopping. They GOTTA spend their refund check. They MUST get the new iPhone because their current one just isn't as good as the Jones' new phone. They MUST get a pool installed because their neighbor did and it's awesome.

I've lived in a home that was literally less than our combined yearly take home pay for ~7 years. It's now paid off in full and I just continue to sock away money for when I WANT to upgrade our living to a nicer home.
 
Oct 12, 2009
37,473
761
136
#90
You're getting way too much into the weeds.

The problem is simple: Keeping up with the Jones.

Everyone convinced themselves they NEED a new car every 3 years. They NEED a house that is $600k. They NEED new shoes. They NEED a new purse. They MUST go shopping. They GOTTA spend their refund check. They MUST get the new iPhone because their current one just isn't as good as the Jones' new phone. They MUST get a pool installed because their neighbor did and it's awesome.

I've lived in a home that was literally less than our combined yearly take home pay for ~7 years. It's now paid off in full and I just continue to sock away money for when I WANT to upgrade our living to a nicer home.
Thankfully I'm not that way nor is my wife. My Tacoma is 9 y.o. with 81K miles and could possibly be the last truck I buy. I am almost 55.:oops: Her RAV4, also 9y.o., might need replacing sooner (140K miles). She has an IP 6 and I still have a flip. House is paid. Neighbors? Mine are dead so I'd rather not keep up with them.:D

I am still way behind though. 20 years of making little $$ working for others and now a 17 y.o. with college aspirations.
 
Nov 8, 2012
12,094
1,588
126
#95
There’s nothing dirty about it. It’s how a democratic republic defends itself against oligarchy.
Yeah, I mean... god forbid taxed income remain as taxed without taxing it again.

Otherwise you might as well just call it what it is - wealth redistribution.... Except... you know.. it never is actually redistributed effectively to people. Just magically disappears into the void known as government spending.

Side note: On the note of inheritance, there is inheritance tax commonly known as the estate tax - but that is only for inherited amounts of $11.2m or more.
 
Jul 20, 2001
55,175
1,848
126
#96
Yeah, I mean... god forbid taxed income remain as taxed without taxing it again.

Otherwise you might as well just call it what it is - wealth redistribution.... Except... you know.. it never is actually redistributed effectively to people. Just magically disappears into the void known as government spending.

Side note: On the note of inheritance, there is inheritance tax commonly known as the estate tax - but that is only for inherited amounts of $11.2m or more.
I don't care if the government burns the money collected through the inheritance tax; the point is to break up concentrations of wealth that have f'ed up our political system.
 
Aug 25, 2001
44,098
705
126
#97
I don't care if the government burns the money collected through the inheritance tax; the point is to break up concentrations of wealth that have f'ed up our political system.
I know, right. Look at what happened to Venezuela, they sure showed those few remaining rich folk, didn't they.
 
Jul 15, 2003
71,416
767
126
#98
and when we win the lottery too!
the lottery is a bigger scam than regular gambling.

Half the money spent immediately goes to the state.
of the other half they pay out winnings but they either tax your balls off, or they spread it out over a hundred years and realistically you & your family will never get it all. By the time the payments are finished, inflation has made the money worth considerably less.
 

rh71

No Lifer
Aug 28, 2001
51,926
120
126
#99
Doubtful. I started a new job late 2018 making a lot more and my wife quit her job and they gave her $298k in severance (yes, wtf). We had to defer it to 2019 just so we didn't get slaughtered in taxes. Thankfully they let her. So we'll get slaughtered in 2019 instead. F U Sam.
 
Nov 8, 2012
12,094
1,588
126
I don't care if the government burns the money collected through the inheritance tax; the point is to break up concentrations of wealth that have f'ed up our political system.
Yeah, make sure to pray and shake your fist at the evil rich people daily. For they are forbidding you from innovating, taking risks, and working hard.

I mean, feel free to proclaim regulations on preventing money in government such as getting rid of political spending - that doesn't mean someone that earned money should be giving it up just because they rightfully earned. Jealousy is a never-ending drug, you know?
 

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