Taxes

[11larkin11]

Now, Im only 16 and don't really know much about the World of Taxes. All I know, and this might even be wrong, is that I supposedly get my Federal Income Tax back.

Now, I just got my W-2, and my Wages, Tips, other comp. was $3466.06. My Federal Income Tax withheld was 157.05. Now, do I get this back or not? I've heard since its under 5,000 I don't. I've seen things such as dependent. I live with my parents so do I still have to file them?

If it helps at all, I make minimum wage at a pizza place.

[Boston Red]

You don't get to take your personal exemption since your parents will claim you as a dependent, but you DO get the standard deduction, which is $5350 for 2007. Essentially, this means that if you file your 1040-EZ, you'll get your $157 back.

[oneupper]

Invest $30 in TurboTax and do your own taxes this year. (I think you may be able to do it online for less or even free).

You'll be filing and paying taxes for the next 70 years or more. Starting to learn HOW NOW, before your life and finances get complicated will benefit your greatly ($$$) in the future, IMO.

[GAC]

Invest $30 in TurboTax and do your own taxes this year. (I think you may be able to do it online for less or even free).

You'll be filing and paying taxes for the next 70 years or more. Starting to learn HOW NOW, before your life and finances get complicated will benefit your greatly ($$$) in the future, IMO.

A 16 yr old, living with their parents, and getting back their $157 just don't seem right to me. :lol:

But TurboTax is the way to go.

[SandyD]

go to irs.gov

they have the forms you can print. also links to places you can e-file for free. (not everyone is, but you should qualify.) Online. And have your refund direct deposited. TurboTax is one. I've used this service for the past several years with no problems.

Just make sure you don't "declare yourself" and only take the standard deduction Boston Red said. You should get some, if not all. of it back.

I wouldn't invest in software if I could file 1040EZ. It's a 1-page form. Either way, I'd do it today, while I'm thinking about it. Just make sure you everything ... including interest income if you have savings.

Don't forget you may get your state tax back too, if you paid any.

Welcome to the spring madness.

[Highlifeman21]

Or being 16, you could always do the sound thing and ask your parents.

I can't imagine they'd shun you if you asked them for help doing your taxes.

[Heath]

I remember being in college and Dad wanted my exemption, but I made too much money and I wasn't going to get my entire tax back. So, Dad and I worked a deal where I was refunded the difference from what my parents recieved.

As far as 16 yrs old - ask Mom or Dad. Don't spend $$ on something - H&R Block lets you e-file for free.

[15fan]

Step 1: Figure out what you are getting back from your taxes.

Step 2: Come up with a saving or investment plan for the money. If you get the check back from the IRS and just let it sit there, it will burn a hole in your pocket and you'll drop it on something.

Instead, look at this as free money. It's money you haven't had. Set up an IRA or something. We've got some astute financial planning type folks around here. If you or your family don't know anyone who can give you good advice, I'm sure we can get some of the experts on here to weigh in. This is a great way to start learning about the importance of saving, investing, etc. The earlier you start, the better off you'll be in the long run.

[Ltlabner]

Instead, look at this as free money. It's money you haven't had. Set up an IRA or something. We've got some astute financial planning type folks around here. If you or your family don't know anyone who can give you good advice, I'm sure we can get some of the experts on here to weigh in. This is a great way to start learning about the importance of saving, investing, etc. The earlier you start, the better off you'll be in the long run.

Agree and dissagree.

Agree 1000000% about setting up a savings plan now and getting into the habbit of saving when young. Even small amounts of money now will grow into something big over time. Plus once you get in the routine of saving you can increase the amount, and move into better investment vechiles as you make more income.

Plan on a monthly amount you can afford and then put it into savings as if you are paying a bill right at the begining of the month. Just using "whatever is left over at the end of the month" will greatly reduce what ends up in savings. We put a specific amount in savings every month, and then also put whatevers left over (if anything) at the end of the month. Start with a regular savings account for now, and then look into other investment options down the road.

Dissagree 100000% about viewing a tax return as "free money". It's not free money, it's YOUR money, that the governement has kept for up to a year and returned to you with ZERO interest. It's the furthest thing from free. Horrable, horrable savings plan to have as much taxes as possible withheld every month so you get a big return. I'm not making any commentary on paying taxes, just saying that trying to plan on a big return is a flat out dumb way to save money.

I understand what you mean about how the orginal poster should view this particular tax return as "found money" and using it to jump-start a savings account, but it's a big mistake to view tax return as a gift from uncle sam. If anything, they are returning stolen property.

[15fan]

Believe me, I'm on the same page as you with respect to shooting for a mega big monstrous refund as a savings program. Not smart at all.

$150? That's more along the lines of - hey, I found a $20 in the pocket of my jeans. Guess I forgot it was there when I tossed 'em in the laundry.

[SandyD]

You should have a budget ... even at 16.

And keep in mind ... you should keep base savings, and savings for major purchases, and savings for college separate ... on paper.

Leave your college savings/base savings alone.

I should qualify this: I am not an expert. But I do think budgeting is something not being taught to young people.

My friend gives her daughter money ... every time she goes somewhere. They didn't want her to work right now, so she could concentrate on school, so they pay for her car/ins/gas/clothes/money to go out on the weekend. Whenever she asks. They can afford to, but they aren't really doing her any favors. She should have limits. Eventually she will.

[Dom Heffner]

I'd save the money on TurboTax and have someone show you how to fill one out.

Why give up close to 20% of your return for something as simple as filling out the 1040EZ tax form?

Hope I'm not missing something, but Dad should be able to show you how. You really are just reporting what you earned and paid in federal taxes while comparing them to what you should have paid and then subtracting the difference.

It's not very hard.

[LoganBuck]

Your parents should be able to help you. It will never be easier for you.

[Ltlabner]

Believe me, I'm on the same page as you with respect to shooting for a mega big monstrous refund as a savings program. Not smart at all.

$150? That's more along the lines of - hey, I found a $20 in the pocket of my jeans. Guess I forgot it was there when I tossed 'em in the laundry.

Yea...totally agree. $150 is a nice way to jumpstart the old savings.

I am a Turbo Tax fan, but agree with Dom. If all you are doing is 1040EZ, I'd skip the $20-$30 and do it the long hand way. As much as I hate to say it, it's always good to learn how to do something the long-hand way before using the short cuts.

[Spring~Fields]

Well since he is so young, maybe he could donate it to us old goats. :D

[gonelong]

At 16 you should save a good bit of your money just so you know how it all works. Don't be afraid to spend a bit of it either.

Plan for your future, but have some fun today. You only get one Jan 20, 2008, and you only get one year of being 16.

GL

[vaticanplum]

I agree with 15fan. Take your refund and start an IRA or put the money into some super long-term fund (CD or something). I know it's probably insane to you to think about retirement at your age, but even a little bit of money now will multiply exponentially by the time you retire. Depending on whether you contribute a little bit here and there and what kind of fund you have, it could literally get up into the hundreds of thousands or beyond by the time you retire; starting the same fund when you're even seven or eight years older than you are now will not have the same effect. The difference it makes to start saving young is staggering. It will even give you a little more freedom at, say, 25 when you are at a job with a 401K and feel like you're struggling to contribute to it; you may not have to contribute as much.

[oneupper]

At http://turbotax.intuit.com

he can do his taxes online for free (including eFile). Sounds like a sweet deal to me.

As for investment opportunities for this young man, if he wants to save for retirement, it makes more sense to open a ROTH IRA than a traditional one, since he doesn't need the income reduction that the traditional IRA gives him (he'd be funding with after-tax dollars).

Then again, he could invest in some REDS tickets and contribute to Redszone. (GIK and Boss are on the phones, waiting).