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I think "minimize taxes" is short for "minimize tax liability" and refunds due to overpayment have absolutely nothing to do with that once you've paid enough to
by hunter2_ 2y ago
I think "minimize taxes" is short for "minimize tax liability" and refunds due to overpayment have absolutely nothing to do with that once you've paid enough to avoid penalties and interest (which is only ~90% of your liability).
- relaxing 2y agoMy point is they’re not doing any sort of planning to minimize their liability. They’re not doing sound tax planning of any sort.
- hunter2_ 2y agoAh, ok. It sounded like one or the other (i.e., people who inflate their refund aren't planning well) but personally I find that adding withholding at an amount that often leads to an inflated refund is a good low-effort way of minimizing risk of underpayment penalties (and it eliminates the need to think about estimated payments) for those good years where substantial gains unexpectedly occur. Of course it's like giving a free loan, which isn't great, but it's miniscule relative to the time I get back by thinking less. And I definitely minimize my liability -- loss harvesting, avoid short term gains, etc. -- so I am squarely in both camps.