Well, it's getting close to that time of year again when the scent of tax refunds are in the air. Many folks have already waded through the hip-deep piles of data and receipts in preparation of this year's tax forms. After all that work, it seems a shame to have to wait so long to get that tax refund check.
Well, there is no need to be uninformed when it comes to the exact location of that tax refund. The IRS has a web–based Refund Status tool that can reveal the exact amount of the expected refund as well as the current filing status. And don't worry if the tax forms were filed jointly because only one social security number is needed to check on the refund status. Interestingly, filing taxes electronically cuts the wait time for a refund check in half.
Plan For the Tax Refund
There are many ways to use the money from a tax refund. Most people spend the money right away on some splurge or item they have been waiting to purchase for some time. Most folks don't really save money regularly so a tax refund is the only way they can actually put together enough money to purchase some of the large ticket items.
There is a better way to use that tax refund check. Probably the best thing to use money from a tax refund is to pay down debt. Yes, it's not sexy or exciting, but it's the number one best way to use the money if in debt. If there is any amount of debt or high interest loans, it's best to use the refund bucks to pay down that debt first. A simple calculation will reveal paying off debt first pays more in the long run.
Who's Money is it Anyway?
Federal withholding tax is actually not money that belongs to the government. That money belongs to the individual taxpayer and is simply over-calculated and withheld in order make it easier for folks to pay their taxes. Individual taxpayers can opt to not get a tax refund and get that money upfront to use now. It will require discipline so be careful when deciding to go this route.
First, go to the IRS website and determine the exact amount of withholding. An accountant or professional tax preparation expert can also help to determine the exact amounts and numbers necessary to have less money withheld from a paycheck, and therefore, more money sooner. Simply take the additional money that was previously being withheld and place it into an interest-bearing savings account. The money will be drawing interest all year rather than being withheld by the IRS and getting nothing in return.
High Cost of Withholding
If discipline is lacking and intentions tend to be on the side of spending money rather than saving it voluntarily, perhaps withholding is the right way to go. For some folks, this is a way of forced saving, and the only way some folks will ever have any "saved" money at all. If this is the case, then deciding to let the government keep one's money through withholding may be best. Nothing wrong with that. Just realize it's costing money to do it that way.
Think of it this way. If a cost savings of just 10% could be realized over a single year, how much money could be saved personally? Now think about the amount of money that can be saved personally over a period of five or ten years. These days, when money is tight and every dollar counts, that's money in the bank. Calculate individual amount that can be withheld by using the IRS Withholding Calculator.
This information is not intended to be a source of legal advice, and no information in this article should be considered or relied upon as legal, tax or financial advice on any specific matter. Never act upon general information on legal, tax or financial matters without seeking legal counsel regarding a particular situation. Check out the IRS website for more information.
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Top Tips to Get a Bigger IRS Tax refund Check
Top Tax Deductions for 2009 - Car Expenses
Top Tax Deductions for 2009 - Mortgage Interest
Sources:
www.irs.gov; How Do I Adjust My Tax Withholding (accessed Mar 13, 2010)
www. getrichslowly.org; How to Check Your IRS Federal Tax Refund Status (accessed Mar 13, 2010)
Mark Oehlert - Mark has 50 years life experience (wisdom comes with age, right?) and over 28 years experience writing copy for ads, articles, marketing ...
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