How to Pay your Taxes

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Reader Comments (38)

Not being a Murrican, and living on a desert island I would mock you but you'd probably invade.

March 2, 2014 | Unregistered CommenterDave

I want Missy to explain her thing in panel 4 to the rest of the world. They do not seem to get that at all.

March 2, 2014 | Unregistered CommenterThe Chosen One

Missy in the last panel is what I always say, every tax season. It never seems to catch on, though.

March 2, 2014 | Unregistered CommenterAkai

If I were president, I would raise taxes, but increase withholding even more (but make it so you could opt out of the withholding.) The government would get more revenue, but most people would feel like they came out ahead because they got a bigger refund.

March 2, 2014 | Unregistered CommenterRedshift

Since we must take up the tax.....If you overpay your state taxes and get a refund, the I. R. S. says that's taxable income! Don't be surprised if that change from the store is taxable next!

March 2, 2014 | Unregistered CommenterRufus T Firefly

A refund means you overpaid. Over the course of the year the government put your extra money in a bank and earned interest on it, then returned your money and kept the interest it earned.

March 2, 2014 | Unregistered CommenterJason

It's all worth it when you realize, that the amount you pay won't pay
for single part on an airplane that can't even fly.

March 2, 2014 | Unregistered CommenterAl

It's simple, a refund means you gave the government an interest free loan and you lost the potential interest you may have earned on that money plus you lost the inflation rate. I am amazed that people get excited about a big refund.

March 2, 2014 | Unregistered Commenterdeimos

It's less like getting change and more like finding out you have to pay less than you thought. Like, if the store told me they were having a 2 for 1 of something I was going to buy anyways.

March 3, 2014 | Unregistered CommenterE

It doesn't catch on because while factually true, it's overlooking a practical issue: "breaking even", the ideal situation, is highly unlikely. So it's either "receive refund" or "pay more". Naturally, people are a lot happier when they receive a refund instead of paying more.

March 3, 2014 | Unregistered CommenterMRL

I withhold the minimum required to avoid a penalty, and pay the remainder within a week or two of the last day possible.

The Government already has me required to pay, I'm not required to give them an interest free loan on top of that.

I'll only give you an interest free loan if I like you.

March 3, 2014 | Unregistered CommenterGekkobear

My response when I get a refund: "Hooray. The government is being generous enough to let me have some of my own money back."

March 3, 2014 | Unregistered CommenterThe Other Mike

Part of the problem with tax is that everyone is trying to pay no tax. It's not seen as something to pay, but something to avoid. So it's inevitable that the IRS would become far too strict in its policy.

It's much the same the world over, but it's more like they would prefer to pay no tax, rather than trying to pay no tax (except where you're part of the wealthiest who buy accountants to find and use loopholes).

In the UK, everyone *complains* about taxes, but it's paid. PAYE probably helps: you don't get to see the money so it doesn't appear to be taken from you. And it's seen often to do some good things. And, politics being what it is, lots of dumb things, too. And that helps accepting taxes.

March 3, 2014 | Unregistered CommenterWow

This year, if you do your taxes with TurboTax (not a paid spokesperson, yada yada) and are getting a refund, you can elect to recieve 110% of that refund as an Amazon credit. So the argument that you are giving the government an interest-free loan actually turn into a pretty good ROI.

https://ttlc.intuit.com/questions/1899434-about-the-turbotax-refund-bonus-program

If you shop at Amazon...
(Hint: use Scott's affiliate link. Not a paid spokesperson, yada yada.)

March 3, 2014 | Unregistered Commenterclueless noob

Not just getting change at a store, but realizing you've given the government an interest-free loan for the better part of a year. Not exactly priceless, but, you know, that OTHER thing.

March 3, 2014 | Unregistered Commenterkhereva

This is a major reason I support the FairTax. Gets rid of the IRS entirely, and eliminates all of the billions of dollars of waste on tax compliance every year...

March 3, 2014 | Unregistered Commenterthak

This is the one time of year it feels better to have student loans, a mortgage, and three children.

Missy's right, but I'd rather get an imaginary bonus every year. Especially considering there's no effective way for a middle class American to invest only a few thousand dollars for less than a year in any meaningful way.

March 3, 2014 | Unregistered CommenterFMA

Obviously, the gummint DOES care what we are doing, on top of getting way too much of our money. Come the revolution, that's all going to change.

March 3, 2014 | Unregistered CommenterMr. Obvious

@demios
"It's simple, a refund means you gave the government an interest free loan and you lost the potential interest you may have earned on that money plus you lost the inflation rate. I am amazed that people get excited about a big refund."

It's simple, I'm married to an indiviual who given any money will spend it very quickly. By giving a "interest free loan," to the IRS and getting a refund is a way of saving because that money is not being spent by my wife. For me, I actually elect to overpay the government because having an interest free loan come due once a year to pay off big bills and purchases, is a great system for me.

March 3, 2014 | Unregistered CommenterChubby Monkey

It's not like interest on those withheld taxes is going to add to a lot anyway. What is it, $25 per $1000?

March 3, 2014 | Unregistered CommenterMoon

That's a good analogy at the end. I'm going to use that when I keep trying to explain tax returns to people.

March 3, 2014 | Unregistered CommenterThestas

A tax refund is like a secret savings account where I successfully hid a portion of my income from my spouse for a year without being actionably dishonest. While we had no reason to spend that money, it would've been spent if it were in a more accessible place. It's the only way we ever save for vacations.

March 3, 2014 | Unregistered CommenterDrowlord

Er, it always feels good to have three children. I meant *financially*.

March 3, 2014 | Unregistered CommenterFMA

"Since we must take up the tax.....If you overpay your state taxes and get a refund, the I. R. S. says that's taxable income! Don't be surprised if that change from the store is taxable next!"

It's only taxable income if you deducted it in the prior year. So, since you got the money back after deducting it, you have to give the deduction back.

March 3, 2014 | Unregistered CommenterSirTJ

I prefer to think of it, as like finding money in your couch every February.

March 3, 2014 | Unregistered CommenterMike N

These days, the guv'mint *is* allowing some people to choose what they pay for (or don't). Idiots get to choose to not pay for birth control, family planning, etc. And not that the only reason it's working is because it is a majority imposing its will on a minority. When I was a conscientious objector years ago I didn't get to opt out of war taxes.

March 3, 2014 | Unregistered CommenterDabney Copeland

I dunno about the not getting to choose where your tax money goes. The gov. has never come right out and TOLD me I'm paying for the war. I prefer to believe that some warmongering individual is paying for the war and I'm paying for my sister's VA benefits.

March 3, 2014 | Unregistered Commenterlala

This is a major reason I support the FairTax. Gets rid of the IRS entirely, and eliminates all of the billions of dollars of waste on tax compliance every year...

Would also likely eliminate that pesky middle class.

March 3, 2014 | Unregistered CommenterGromit

Actually, my return is based on the fact that I am a student and the government has reimbursed me for college tuition. Not the full amount but the cost of one class. Better than a loan I have to pay back. In addition, I qualify for the earned income credit. My large return is because of being working poor and a college student.

My entire paycheck goes to pay for college. Fortunately, the U.S. federal government understands a values education.

March 3, 2014 | Unregistered Commenterstjerne

@Dabney Copeland

Aside from the aggressively partisan rhetoric, the problem with that argument is that money is a rather flexible commodity. Let's take a more light-hearted example. Suppose that Bob has "opted-out" of funding supplies for Congress' annual Christmas party. (Insert joke here about said supplies being birth control.) The roughly 0.02 cents of his taxes that might've gone to party supplies instead is said to go towards upkeep for a National Park. But since Congress' budget doesn't change who gets what based on how much revenue comes in, or from where, the party fund's not being reduced by 0.02 cents. Instead, 0.02 cents of Alice's taxes that would've gone towards upkeep of a National Park instead goes towards hiring a dance instructor, so the two parties won't get into a fight over who's doing the Electric Slide wrong. For all practical purposes, there's no actual effect in "opting out."

Now, with that aside, I'd like to express appreciation for how Scott consistently avoids partisanship when covering sensitive issues. Given the tendency for negativity in the humor, it definitely helps keep the comics friendly to a diverse range of beliefs.

While I view the "Panel 3 Effect" as confirmation bias, this time I definitely found it the funniest. I'm not sure whether to laugh or cringe at the truth found in Panel 4.

March 3, 2014 | Unregistered CommenterI Ain't

chubby monkey et. al. take the refund one year, buy into a mutual fund and start automatic deductions from your bank account, $3,000 a year is not that difficult, adjust your withholding and in about 30 years you will have about $450,000.

March 3, 2014 | Unregistered Commenterdeimos

I'd feel better about taxes if there wasn't so much waste and corruption and people resentful of the services that benefit, thus bootstrap those less fortunate than themselves.

March 3, 2014 | Unregistered CommenterKevin Kunreuther

I realize in principle you loose opportunity if you over contribute, but what is that cost? High interest savings accounts give about 0.7% these days, if an average return is $2,800, that's $11 interest. If you buy monthly into the stock market, that's usually $9 trading fee or so. That's spending $108, or you could buy at once at $9. The market may go up or down. Over years the market historically goes up, but less than one year is too short a time.

I really want to know if people are up in arms about loosing the $11 because of the principle, or do they feel they have a guaranteed return?

Historically my tax refund bonus has been used for: paying off car loan, paying down student loan, investing in stock market, towards an emergency fund.  It is MUCH easier for me psychologically to be responsible once a year with a big chunk than twenty-four times a year with smaller chunks (24 = number of paychecks if paid twice a month). I understand that's me, not everyone else, though.

March 4, 2014 | Unregistered CommenterAmy B

Why overpay and get a refund?

Because vacation, that's why.

March 4, 2014 | Unregistered CommenterKielbasi Kid

@demios
It's simple, a refund means you gave the government an interest free loan and you lost the potential interest you may have earned on that money plus you lost the inflation rate. I am amazed that people get excited about a big refund."
I am trying to figure out where the potential interest earnings are. I keep on average $5,000.00 in my credit union savings/checking account every month and earn 50 cents interest. I made a big whooping $6.00 last year. I know you can invest in stocks/bonds/ etc. but with those markets being so volatile it is easy to lose your investment. I let the guvmint have the money and when I get my refund I feel like I have made more than if I let the Wall Street sharks suck it away.

March 4, 2014 | Unregistered CommenterKerrywithaK

I usually end up over paying myself, but to all those saying that you can't earn much interest on the money withheld, ask yourself, whose fault is that? The Fed sets interest rates after all. Anyway, a few dollars is better than nothing.

March 4, 2014 | Unregistered CommenterDonut-san

Amy B. is exactly correct. It's the psychological costs and difficulty, and also the fact that it's not really possible to invest such a small amount for such a short period. High transaction fees and low ROI.

Also, all the math people are using here is based on the theory that you would have had that money for the entire year, which isn't the case.

March 5, 2014 | Unregistered CommenterFMA

The potential earnings aren't the kicker; it's the potential loss.

Lets say I overpay by $2,500... then have a car/health/etc. issue costing me the $2,500 I don't have because i loaned it to the government interest free.

How much does it cost me to get a loan (or put that $2,500 on my credit card if I don't have the credit to get a loan) because I overpaid?

At that point we aren't looking at losing out on a 0.5% return, but losing perhaps 15-20% of my loan because I had to re-borrow that money.

March 5, 2014 | Unregistered CommenterGekkobear

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