EQ Bank Savings Plus Account

Things To Do With Your Tax Refund

in Income Tax, RRSP

Yes, now that you have gone and purchased a bunch of High MER Mutual Funds, for your RRSP, what are you going to do with that big fat tax refund you will be getting?

Bloated Wallet

Leave That Money In Your Wallet not with the CRA!

Some Suggestions:

  • Buy a vacation that costs 4 times as much as your estimated refund, because you deserve it!
  • Buy a new honkin Big TV, then forget you’d spent the money and put a down payment on a new car too, finally find another thing, so that you actually spend your refund 3 times over.
  • Go back in time and adjust your tax payments, so that you have your refund money in your hands during the year and you don’t get a big wad of cash at the end of the year, that you are tempted to blow!

This really does seem to happen a great deal, that folks want to get big rebate cheques from the government, instead of filling in a form with your payroll folks to have less tax collected during the year?

Yes, I do end up with a tax refund, but not a big one, just enough in case I screw up or the day that this site suddenly makes me a fortune (I equate that with a lottery win), of about $1000 (it should really only be $200 as my goal, but I have screwed up a bunch of times on my taxes).

Why do people love big tax refund cheques, if it simply comes from buying RRSPs in February? I suppose it’s better than paying a big chunk of money because you owe, but I just don’t get it.

{ 8 comments }

  • Pam@Pennysaverblog March 4, 2013, 9:50 PM

    Some people like getting big refunds because they know they won’t have the discipline to save throughout the year, and if the government holds their money for them, then they can’t spend it (until they get their refund, that is).

    Reply
  • Bet Crooks March 1, 2013, 6:01 PM

    Sometimes we get a big tax refund from making a big RRSP contribution in Feb, but that’s if we get a big bonus that Feb so we have extra to punt into the RRSP. I don’t think we’re the people you’re talking about though. (FWIW we then put the tax refund into the RRSP too.)

    FWhatElseItsW, we also give some big donations to charity in Feb if the bonus comes through. We figure everyone should get a bonus if we do. I suppose we could adjust our tax deductions for that, but we don’t usually.

    Reply
    • bigcajunman March 1, 2013, 6:27 PM

      Good call on the Karma with the bonus (if good thing happen for you, spread the good).

      Reply
  • Chris March 1, 2013, 10:12 AM

    Would love to avoid a big refund cheque, it’s just impossible in some circumstances:
    -Changing jobs mid year, there will be some duplication of CPP/EI deductions, with no way to have the 2nd employer reduce them
    -First year of deductions – to get a T1213 (reduction of taxes at source) you need to prove to the CRA that this coming year you will donate or do RRSP contributions. It’s difficult to prove without having a year of history
    because of these two items, I’m stuck with a big refund, but hope to not be in that boat next year

    Reply
    • bigcajunman March 1, 2013, 11:19 AM

      Very true, but planning to have a large refund seems silly to me.

      Reply
  • Katy February 27, 2013, 9:49 PM

    When we bought our current house, the bank didn’t include property tax in the mortgage payments (they had with the previous house). We didn’t set up the monthly tax plan with the city, as there were extra fees. So, we were lazy (use the excess taxes paid as “forced savings”) and used the tax refund to pay off the municipal tax as a yearly lump sum. And since we’re lazy…..when the mortgage ended, we hadn’t changed our system.

    Reply
  • My Own Advisor February 27, 2013, 8:22 PM

    My refund might be $100 this year. Can I take a vacation with that? 🙂

    Will tweet!
    Mark

    Reply
  • Mark Foster February 27, 2013, 5:29 PM

    “I just don’t get it.”

    Don’t try to hard… the most common reason I hear that people like a big tax refund is forced savings. This highlights the biggest problem in personal finance. Peoples lack of discipline to save on their own.

    The other reason is laziness.

    Last year I owed $50. This year I will probably owe more.

    Reply

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