Expecting a Tax Refund?

January 26, 2009

If you’re like me, you can’t believe it’s tax time again. Time to pull out the shoeboxes and go through receipts for the year, Or, if you’re lucky, just collect all your W-2’s and 1099’s.

Are you expecting a refund this year? If so, read on…

Each year, millions of Americans look forward to a Spring windfall. The government kindly sends them hundreds or even thousands of dollars, which they will wisely invest or use to fulfill lifelong dreams.

But there’s another way to look at this rosy scenario.

Each year, millions of Americans let Uncle Sam hold on to hundreds or thousands of dollars, interest-free. After letting the government reap the rewards of their hard-earned cash, they fritter away their refunds or – even worse – take out loans to tide them over until their refunds arrive!

As much as we all love to get a hefty check in the mail, let’s face the facts. A tax refund simply means you’ve been paying more than you need to all year long. So why let Uncle Sam use your money, when you could be using it yourself?

If you are expecting a large refund for last year’s taxes, ask your tax advisor if you should adjust your withholding rate this year. Set aside the extra income in a separate account, and next year at this time you’ll have a windfall of your own – with interest!

And don’t forget to have your refund (if you’re lucky enough to get one!) directly deposited into your checking account. Simply ask your bank or credit union for their ABA or Routing Number, and have your account number available. That’s it – you’ll get your money fast, and save paper.

There is a small chance that, because of California’s deficit problems, taxpayers expecting a refund may get a registered warrant or IOU instead. According to a report from MSNBC, “Even without a deficit resolution, issuing IOUs is not the only option for tax refunds. The state could simply delay payment. Under the law, it has until May 30.” Hopefully, in the coming weeks, the State will resolve this issue and everyone who is due a refund will get it without a problem. Stay tuned.

Whichever form you need to fill out, or whichever tax bracket you’re in, there is an easier, more reliable way to do your taxes. With H&R Block TaxCut, you can file your EZ forms for free! You can even do an e-file for your federal return, for free (State e-filing requires a minimal fee)! They offer free advice, and up-to-date tax information. If you used TurboTax last year, you can even import that information into TaxCut. Check it out here!

Questions or Comments? E-mail me at blogger@matadorsmoneymatters.com.

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