Income Tax Refund Roundup
Now that the holidays are behind us, many of us are already thinking of our Income Tax Refund. As you eagerly await your filing documents, let me provide you some food for thought about your options this tax season.
Free Tax Prep
You may qualify for free tax return preparation from a trained volunteer at your local VITA site. Volunteer Income Tax Assistance volunteers are available to provide free 1040 tax form completion and e-filing for families with an income of $54,000 or less. Many of those who qualify for VITA tax help will also be eligible for the Earned Income Tax Credit (EITC). VITA volunteers are trained to identify available tax credits and file for those who qualify.
Think about splitting your refund in half. Use one half to buy those things you’ve been waiting to buy with your refund. Then use the other half to start your emergency fund. The IRS even has a direct deposit form that allows you to choose more than one account. Having an emergency fund prevents a financial setback from setting you too far back to recover. It also prevents you from being part of the 44% of Americans that couldn’t come up with $400 out of pocket in an emergency, identified in a recent report by the Federal Reserve.
Lastly, consider revising your deductions to avoid getting a refund at all. Wait…what??? Think about it this way – a tax refund means you paid in too much during the year and the IRS has to refund your overpayment. They have been holding your money all year without paying you any interest on it. Why not adjust your W-4 form to claim more dependents so that less is deducted from your paycheck through out the year? This will leave you with more money to live on all year long. You then have the option of using your own money to start a savings account that pays interest, unlike the IRS.
For specific tax questions, be sure to speak to a qualified tax advisor. Happy filing everyone!