(01-01-2021, 02:33 PM)mal234 Wrote:

(01-01-2021, 12:48 PM)StroudCrowd1 Wrote: Rule of thumb, if you don't owe the IRS money, you are doing it wrong.  The uninformed (usually Democrat) tax payer doesn't understand why they get a big fat check back from Uncle Sam. The celebration of getting your own money back is sad.

I remember learning in college when I was taking some business/financial courses that it was best to try and break even. I had one professor in college who often preached how a "perfect" tax return includes people not owing the IRS and the IRS not owing them anything. She often said if you got a big refund back, that you gave the IRS an interest free loan of your own money. And you could take that money and earn interest on it elsewhere.

I've never really gotten a big refund and one reason is because I don't have kids/dependents. So I want get stuff like the Child Tax Credit, Additional Child Tax Credit Earned Income Credit related to children or EIC period.  I remember in the past working at a job and seeing clients get back like $10,000 and $11,000 largely related to having kids. And how some of those people weren't satisfied with that. They would be like "is that all?" lol. Heck, I've seen situations where someone had kids and actually got back more money than they made for the year. People that don't have kids/dependents will typically not get some of the big refunds that a lot of people with them get. And I definitely understand that.

I'm definitely okay with owing the IRS this year. I would be okay with doing it every year, if I could make at least around the type of investment income I made this year. In March when I thought that my last job was going to be laying people off,  I opened up a robinhood account and started investing money. I took money from paychecks and from my federal, and state refund and started putting money in it. And then that job laid people off and I got my new job. And I just continued investing. I found a penny stock that did very well. I didn't even own a ton of shares, but it still performed well. And I was able to move into a new place and put a nice amount back into my local economy.

I'm not sure how much money I made from investments this past year, but I know I probably spent like at least an extra $7,000 (in additional to paying normal expenses) in my local economy the past few months (like since August). From moving and getting new furniture for my new apartment and paying two rents one month. One rent to my old place and one for my new place because I couldn't move into the new place until later that month. Some of that was money I earned from working and having bonuses but quite a bit of that was from investment income too. Plus I still have some money left in my Robinhood account. (to continue investing and for additional savings, emergency, etc...)

I'm waiting to see what the tax documents look like that Robinhood will send me for this year to see what exactly what I made in total.

For the most part your professor is correct.  For the longest time I was +/- around $200 or so on my taxes until life changed.  Kids grew up, no more dependents and my home being paid off eliminated many of my deductions.  I usually have to write a hefty check to the treasury every year for taxes.

Regarding your taxes on gains you made by investing, it's going to possibly be a good chunk depending on what you invested in, how much you bought/sold and how well it did.  Keep in mind, capital gains applies to how much a stock appreciated from the time that you bought it to the time that you sell it.

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