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How to Invest my Tax Refund?

The news these days is dreary, so I will try to distract our readers. Yesterday, unannounced and unexplained, there arrived in our mailbox a nice-looking envelope from the IRS, showing the right colors through the window. Oh, Happy Days, indeed. The check says it's a refund and that there's interest included. Other than that, we know nothing but we are $4.10 to the good. I hear that Schwab is thinking about offering fractional shares...or I could seek some free counsel here. Such a high-class problem!


  • A Happy Meal! My MCD stock thanks you.
  • You could buy a few thousand shares of an OTC sub-penny stock - assuming your broker offers free trades. You could get lucky and pick a ten bagger!
  • edited October 2019
    @BenWP ... Check-out these beautiful USPS “Forever” stamps commemorating the first lunar landing. There’s two styles (shown). I’d suggest investing in 4 of each style. @ 50-cents each, that would leave you with a bit still allocated to “cash” - a prudent investment approach. When finished admiring, you can use them to mail in your tax returns for the next 8 years. So it’s an investment that will keep paying dividends for many years.

    Since these will always satisfy first-class postage requirements even if postal rates increase, they may be viewed as an inflation hedge. In fact, the price of first class mail is going up 5-cents in January. So you’re guaranteed to net a quick 10% gain on these babies almost right out of the box.

    Alternative Plan: If by chance you intended to say $41 instead of $4.10 (understandable error), than I’d suggest picking up a bottle of Aberfeldy single malt scotch and stashing it away. The new 25% tariff on single malt went into effect yesterday. However, in Michigan the price shouldn’t jump until November 2nd, which is the date the state, which sets spirit prices, normally does an across-the-board reset. Should you be able to afford the latter, your gain would be 25% compared to only 10% on the stamps. As is often the case, those with higher sums to invest stand to earn higher rates of return.


    (Not intended to constitute investment advice)
  • What do you think it cost the IRS to generate that check ?
  • I really like @hank 's suggestion!
  • At least did not get a letter stating you will be audited by irs ( will be a nightmare and turn,family life upsides down) ..

    . Anything plus is better than minus
  • edited October 2019
    johnN said:

    At least did not get a letter stating you will be audited by irs ( will be a nightmare and turn,family life upsides down) ...Anything plus is better than minus

    Yuppers @John

    While I’m fortunate never to have undergone an audit, my state refund was held up last year “pending review”. The several hundred dollars owed me was delayed about 6 months.

    What I suspect happened: I use ultra-short TRBUX for non-sheltered routine checking. That results in 2 or 3 “purchases” or “sales” of shares every month. Writing a check, for example, constitutes a share “sale”. In the past I’ve added up my total gains from this fund (erring on the high side) and reported them as “interest earned.” Last year however, I allowed Turbo-Tax to access my account at TRP. It churned out 3-4 pages of “buys” and “sells” (about 40-50) for TRBUX. The fund pegs a $5 NAV, but that fluctuates by 2-3 cents up/down over a year. So instead of reporting the pittance as “interest”, I enclosed the 3-4 pages of “buys” and “sells” with returns. Feds received a check and seem satisfied, but the state held up my refund - likely to “review” each of those buys / sells.

    I assure you the total interest earned over the year on that fund wouldn’t buy a decent meal for whomever the state paid to perform the review. Yes - it was somewhat more than Ben’s $4.10 refund - but we’re not talking big money here. I realize that strictly speaking those buys and sells need to be reported as short-term capital gains/losses. On the other hand, as long as the government gets the money they deserve (in my case a bit extra), what difference does it make?
  • @hank reminded me that in our case as well, it has been the state of MI that sends the letter you don't want to receive. I agree that it's usually chump change, also. For some time I had computed my buys and sells myself, often because I had sold specific lots of shares, and the IRS accepted my returns. A few years ago they questioned everything investment-related and the only way to comply was to link the Schwab and TDA 1099 forms online. The extra work that year did not alter the amount owed, but it did increase my anxiety. I have since realized I could simplify the whole process by doing it as the IRS wanted and also by transferring or closing out MFs held by individual companies. At present, we have only the Bruce Fund and a small position at Grandeur Peak that are held outside the supermarkets. If I take care of business by carefully designating the shares of stocks or funds I want sold, at the time of the sales, I have seen these efforts reflected in the 1099 forms.
  • I have a similar dilemma. GE spun off a subsidiary company, Wabtec, and we’ve been receiving quarterly dividend checks of 24 cents for our two shares. I’ve got two fat dividend checks waiting to be cashed out or reinvested.
  • @Tarwheel: WAB is a company I have owned, but just follow now. The narrative about the company suggests it ought to succeed. OTOH, it could well be a value trap.
  • Would have to be a damned good trap to snare 48¢!
  • edited October 2019
    I'd rather owe them than they owe me. With this, they get my check (sent with my annual return) for any residual sum owed. My tax preparer prints me a nice remittance form to send with my check.
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