Posts Tagged "tax refund"

Some tax facts…

Posted on May 4, 2012

* The Obama’s 2011 tax return reported adjusted gross income of $789,674. Their tax liability was $162,074, giving them an effective tax rate of 20.5%. * The average tax refund on returns filed for 2011 was $2,983. * For this tax filing season, the IRS had 5,000 fewer employees than it had a year ago. * In 1995, 114,000 IRS employees processed 205 million tax returns. This year, 91,000 employees will process 236 million returns. * The IRS must update its computers with each tax law change. Between 2000 and 2010, Congress made 4,428 changes to the tax...

Read More

Be smart with your tax refund

Posted on Apr 27, 2012

Are you receiving a tax refund this year? No doubt you’ve already heard the standard admonishment about why you should not be giving the government an interest-free loan. Maybe you’ve decided to “do better” during 2012 by revising your withholding or estimated tax payments to reduce the amount of next year’s refund — or maybe you haven’t. Either way, set aside your guilt. Financial planning means creating effective strategies that work for you — which can include forcing yourself to save by overpaying your income tax during the year. The more important consideration is what you do with the money you get back. Here are ideas for making the most of your refund. * Save. The unexpected happens. The question is, how do you pay the resulting bills? Parking part of your refund in a readily accessible location, such as a bank checking, savings, or money market account, will help you weather short-term, temporary setbacks without incurring penalties or transaction fees. * Spend. Spending your refund wisely can get your finances in shape and pay off over the long run. For instance, home improvements like energy-efficient windows or a new water heater may result in lower electric and insurance bills. Refinancing your mortgage reduces your monthly cash outlay, freeing money for investing or saving. Ditto for paying down high-interest credit cards — so long as you resist the urge to reload them. * Self-invest. Using your refund to refresh your current career-related skills or to learn new ones can provide a double benefit: more employment opportunities and tax savings. Unsure of your job security? Put your refund to work by financing a home-based business and creating a second stream of income. Give us a call for assistance related to your tax withholding, estimated tax payments, or tax...

Read More

Plan for a smaller refund

Posted on Apr 12, 2011

Did you receive a big refund check from last year’s taxes? If so, you’re not alone. Many of us deliberately pay extra taxes throughout the year so we can enjoy a nice bonus early the next year. Sometimes it’s insurance against having to come up with extra cash when you file your return. That’s a valid concern. But sometimes it’s just a form of enforced saving. Or perhaps you’ve simply never bothered to adjust your withholding. Those aren’t such good reasons. After all, when you overpay your taxes, you’re making an interest-free loan to the government. Should you adjust your withholding? Reducing your withholding is as simple as filing a new Form W-4 with your employer. The form comes with a worksheet to figure out how many allowances you should claim. Don’t forget to allow for your other taxable income besides wages, such as dividends or investment gains. If you’re worried about underpaying tax, there are a couple of rules you should know. Generally, you’ll escape a penalty if you pay, through withholding or quarterly estimated payments, at least 100% of last year’s taxes (110% if your adjusted gross income is over $150,000), or if you pay at least 90% of what you owe for this year. If you reduce withholding, here are some ideas on how to use your extra take-home pay. * Contribute more to your employer’s 401(k) plan, especially if your company matches contributions. You’ll enjoy a double benefit because the extra contributions will reduce the tax on your wages as well as provide tax-deferred savings. * Pay down balances you’re carrying on your credit cards. That’s equivalent to earning interest on your extra payments, often at double-digit rates. * Put the money in a tax-favored Coverdell IRA or Section 529 plan for your child’s education. Contact our office if you’d like help figuring out your withholding level for...

Read More

IRS announces more savings bond options for your tax refund

Posted on Feb 4, 2011

Last year, you could use your tax refund to purchase U.S. Series I Savings Bonds in your name. This year, there are some new options for purchasing savings bonds with your income tax refund. You can buy savings bonds for yourself and up to two other individuals. Form 8888 is used to designate the person or persons in whose name the bonds are to be issued. The savings bonds will then be mailed to those individuals. Up to $5,000 in bonds can be purchased, and they must be bought in $50 increments. This year, you no longer need to use direct deposit for any remaining refund amount; you may request a paper check for the balance if you...

Read More