Friday, January 22, 2010

TAX TIPS for Maximum Refunds

As seen with Ellie Kay and ABC NEWS NOW.

This year 75% of all Americans will get a tax refund. Last year's average refund was $2,753, with 2 out of 3 taxpayers e-filing their returns. Those with direct deposit averaged a $2,997 refund.

With the economy the way it is, families need every dollar they have coming to them.

But taxes can be sooooo incredibly complicated, especially with the recent tax laws that have passed--how can you figure it out? Help is just a click away as you follow my top tax tips for this year:


  • Procrastination Costs $$ -- Just do it! Start now, the longer you procrastinate, the more likely you are to be rushed in filing your return and that translates into mistakes or missing something that could cost you money.
  • Put Off Spending -- Some of you may be getting big bucks this year, but DO NOT SPEND IT UNTIL YOU HAVE IT! What if you don't qualify for the home buyers tax break and you've already spent that money? This is the same problem we ran into in 2008 when the stimulus checks came out. People spent the money (via credit) before it arrived and then ended up in a pickle when the checks were late. The IRS is having to navigate the new tax credits for home buyers and trying to avoid fraud. This means they won't even start processing those returns with the home buyers credit until mid-February. Many families are counting on these big returns, but you need to be cautious & don't spend what you don't have yet!
  • Professional vs. Predatory Preparers --When the economy is down, fraud is up! Don't ever go to a tax preparer who sets up a shingle outside their door for a few months or those who claim they can get you a larger refund than another preparer. Instead go to a reputable and professional site where you can save money and file for free such as TaxAct . They can handle simple or complex returns and they are free for everyone, regardless of age or income, plus it includes the tax forms you will need.
  • Pressure Loans -- Any tax preparer who pressures you to take a RAL (refund anticipation loan) is someone you need to run from! The interest rates are a rip-off and there are even big names associated with these costly practices such as H&R Block , so steer clear!
  • Put it Off! -- Employers are required to have mailed W-2 forms by Feb 1, 2010. Some tax preparers say they can access W-2s for you early, but it's really best to wait until you receive the real deal in the mail before you e-file.
  • Prepare to e-file! -- If you use the TaxACT Free Federal Edition to e-file, then you have an error rate of less than 1%, compared to 20% on paper returns. If you also get direct deposit on your e-file, then you can get your money in as little as 8 days.
  • Pay Less -- Some of the new tax laws, such as the ARRA (American Recovery & Reinvestment Act) give tax breaks to 95% of taxpayers, with some families saving more than 13K in home, car, college and other tax credits. Make sure you use an online tax program that is all inclusive and up to date on these tax credits.
  • Prepping Year Round -- Go to the IRS website and sign up for their tax e-mail updates that can help you reduce your taxes throughout the year. While you're there look at some of the other information on tax credits, you'll be surprised at how easy it is to understand and that knowledge can translate into dollars in your wallet! Don't forget to go to Ellie's tools section for all kinds of calculators that can help your finances year round as well!
  • Print and mail -- Even if you are e-filing, you still need to print your own copy of the return. If you are filing for certain tax credits, such as the Home buyer's credit, then you are not allowed by the IRS to e-file. In which case, you can go to TaxAct, fill out all the info, print it and then mail it in with the necessary documents that aren't available electronically.

Hope this helps!

Ellie Kay

America's Family Financial Expert (R)

http://www.elliekay.com/

1 comment:

Ashleigh said...

What new laws have been past that we need to know about for filing our taxes if unemployment made up the majority of our income? I am a single parent of 2 children and I didn't have taxes taken out of my unemployment.