Tax Time Saving Tips
by Joy Miller | Family & Community Wellness Extension Agent
If you are feeling like you just cannot get ahead, saving at tax time may help you get started. Saving through out the year can be tough. It may feel like every paycheck is spent before you get it. You can take advantage of tax time to prepare yourself for unexpected emergencies or plan for the future. Here are some tips to help you get started.
There are three great reasons why tax time may be one of the best times of the year to plan for saving.
- Setting some money aside in a separate account can help you be ready to deal with unexpected expenses. It is also a great way to start meeting some of your longer-term financial goals, like saving for car, home, or retirement.
- If you are getting a refund, it may be the single biggest lump sum you will receive all year. This is especially true if you have paid in more taxes than you owe throughout the year and if you are eligible for refundable tax benefits such as the Earned Income Tax Credit.
- Filing your return electronically and direct depositing your refund will help you get your refund quickly and safely.
What steps can you take to save at tax time?
- Plan in advance to save some part of your tax refund. It is likely you already have plans for what to do with your refund, many people do. If you can include in your planning to save part of your refund, maybe 25%, it could help you down the road when an emergency occurs, or you need a little extra cash to meet a financial goal.
- Have a separate account you use to save. There are many options to choose from, including a regular savings account with a bank or credit union, an IRA, a savings bond, or a savings wallet on a prepaid card. Review your options and choose the most convenient way to set aside your savings. Then, set it up in advance so you are ready to use it during tax time.
- Automatically deposit some of your refund into a separate account when you file your return. If you are receiving a refund, use your tax form to tell the IRS to put the part you need right away into your checking account and the rest into your separate account designated for savings. Do not forget to take your savings account information with you if you visit a tax preparer or free tax preparation site.
How to get the most out of your tax refund? To make sure you get every dollar you are eligible for from your tax refund, there are several ways to save tax preparation fees.
- Free File Fillable Forms are electronic federal tax forms, equivalent to a paper 1040 form, are available at Free File: Do your Federal Taxes for Free | Internal Revenue Service (irs.gov). It provides a free option to taxpayers whose income (AGI) is $73,000 or less. You should know how to prepare your own tax return using form instructions and IRS publications if needed.
- Guided Tax Preparation provides free online tax preparation and filing at an IRS partner site, available at IRS Free File | Internal Revenue Service. This service is available at no cost for taxpayers whose AGI is $73,000 or less.
- Volunteer Income Tax Assistance (VITA) provides free tax preparation assistance if your income is $60,000 or less, 60 years or older, or if you have a disability or speak limited English. Johnson County Extension partners with VITA at the Sunset Drive Office Building, click the link Tax Preparation (k-state.edu) for more information about these services and documents you will need.
The Johnson County Library System has put together a great list of all these services and contact information at Guide from our Librarians: Tax Help and Forms | Johnson County Library (jocolibrary.org).
Source: Consumer Financial Protection Bureau