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How many should one claim? I know the fewer you claim, the larger your refund and vice versa, but from a math standpoint, would you want to claim as many as you can so you can use your money(and technically the govs) to earn interest for yourself?

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Posted by mrk
Asked on December 17, 2015 6:22 am
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I always struggle with this one. I never let the government have my money, interest free, for a year. I live in a rural area where there is a lot of poverty, however, and many people use this as a savings plan. I try to explain to the students that it is a very poor savings plan and that they would be better off putting money in a savings account instead. I make sure they understand the implications of using the tax return as a savings plan. At the end of the day, however, I try not to make judgments and let them make their own call. I would love to hear what others think (and do).

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Posted by jholmquist
Answered on December 17, 2015 6:37 am
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I love your “judgement-free zone,” jhomlquist. Sounds like opportunity for a 3-way debate: claim lots of allowances so you can invest the money all year, try to be spot-on so you can keep what’s yours but not owe, claim few allowances so you get a big refund. PROS and CONS of each — what’s the best ultimate strategy? Maybe a 4th group of students can be the jury.

On the other hand, if you’re in a community where getting a big return is a perceived as AWESOME (this is a pretty common philosophy), it might be worth doing something on smart vs less smart ways to spend that return check when you get it. Pay toward a credit card vs a student loan? Put away until time for Christmas gifts (if your plan is to otherwise go into debt at the holidays)? Splurge on something big you’ve needed? Something big you’ve wanted? All sound like opportunities for a great conversation with no ONE correct answer.

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Posted by Jessica Endlich
Answered on December 22, 2015 4:28 pm
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