Itâ€™s tax time once again. Last yearâ€™s average tax refund was around $3,000. Many people quickly spend their refund on various things so it is wise to have a plan for prioritizing where your money will go. You might want to focus on knocking down some debt and building up your savings. Having some fun with your money is okay too, but itâ€™s easy to get overly carried away doing that which is why having a simple list prioritizing where your money should go is important to create. It doesnâ€™t have to be anything elaborate or fancy â€“ a simple index card or large sticky note will do.
If you are going to receive a tax refund save your money and avoid those expensive Refund Anticipation Loans (RALs) unless itâ€™s an absolute financial emergency. Youâ€™re being charged quite a bit of money to get your refund to you perhaps only a week, or days, sooner than normal. The cost difference could mean a week or two of extra groceries for your family.
If you receive a large tax refund and are struggling each month just to get by, living paycheck-to-paycheck, consider revising your W4 form with your employer so you can take home more money each month and breathe a little easier. An extra $200 a month could be more helpful to you than an extra $2,400 once a year.
To get free help with your tax preparation, and find out about possible tax credits and deductions, take advantage of IRS sponsored free programs. The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are free for qualified people. VITA services are for those with annual incomes of $50,000 or less. To find a VITA site near you, search www.IRS.gov, keyword VITA, or call the IRS at 1-800-906-9887. TCE programs specialize in questions about pensions and retirement unique to seniors and are free to seniors age 60 and older. TCE is operated by AARP and other community organizations. To find an AARP Tax-Aide site, visit www.AARP.org or call 1-888-227-7669.
With just these easy steps and a little basic planning, you can maximize your tax refund dollars this year.Â
Mark Foster is Director of Education with Credit Counseling of Arkansas (CCOA). CCOA is a member of the National Foundation for Credit Counseling. Visit CCOA online at www.CCOAcares.com
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.