Monday, April 13, 2009
Tax Time Tips from Ellie
• Wait for Your Refund – If you’re like everyone else in this economy, you need every penny of that tax return. So even though a tax preparer offers to advance you your refund, just wait. Fees can range from $60 to $100 on an average refund of $3000. In fact Americans spent $890 million in fees for money they would have received anyway in 2007.
• Don’t Cash That Check – Some consumers are trying to get a jump on their spending while they are waiting for the IRS check to come in by cashing the checks that come in with your credit card statements. These “checks” have high fees and interest associated with them and the interest starts accumulating immediately.
• Rainy Day Strategies – I’ve recommended that single income families have 8 months of living expenses in an emergency fund and dual income families put back 6 months worth. But most families do not have anywhere near that amount, so get a jump start on your savings by depositing your check into an emergency fund.
• Beware ID Theft when Filing Taxes – Last minute filers who go to a temporary tax preparer are particularly susceptible to identity theft as the personal information on tax forms are exactly what predators are trying to find. Never go to a temporary tax preparer who may lure you with the promise of quick & cheap tax preparations. Instead, look to Turbo Tax, another software program, or a permanent CPA or tax prep service.
• Don’t Believe the IRS – Another tactic for ID theft during tax time is from scammers posing as IRS or Social Security representatives who try to trick you into revealing personal info via e-mail or phone calls. To validate whether an IRS inquiry is the real deal, call 1-800-829-1040.
• Homebased Business Tips – One of the few areas of our economy that is flourishing is in some of the direct sales companies. There are a lot of ways to make sure you get every deduction coming to you such as using Turbo tax or going to a professional. Homebased businesses can get tax breaks for buying their own health insurance, using a dedicated portion of their home as an office and job related moving expenses. But one of the most overlooked tax breaks is the SEP, or Simplified Employee Pension IRA because they think they are too small to qualify. So as your tax pro if contributing to a SEP IRA will help reduce your tax bill while building your retirement!
Here's to minimal tax trauma for you and yours!
America's Family Financial Expert