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, 2008 |
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Saving Money at Tax Time Q - How can families save money at tax time? Where are the best places to turn to find information about tax deductions or other benefits they may not be claiming this year? A - Families and individuals can save money on their taxes by keeping good records and doing the preparation themselves. Free instructions and forms for Federal taxes can be located at www.IRS.gov, or by calling 1-800-TAX-FORM. If the government owes you money, file as early as possible, but don't pay extra fees to an outside company for an "advanced loan" on your tax refund! (See our Tax Help page for a more complete list of links!) ----------------------------------------------- Q - What are some tips you can give to families to help them get organized for next year's tax time? How will being organized help them save money, and time? A - Being organized can definitely help you save money all year long, our free monthly newsletter is filled with tips for managing your finances. And when it comes to taxes, keeping good records of your income and deductions throughout the year - such as donations to charity, medical expenses, child care, tuition and job related expenses, will make things a lot easier come April 15th. If you have trouble keeping up with cash charitable contributions, start using checks instead; instant record-keeping! ----------------------------------------------- Q - What are some things families can start doing right now that will save them money next year? A - One of the most important things to do right now is to make sure you're not giving the government interest-free loans every month. If you're getting a refund this year, ask your employer for a W-4 form and adjust your withholding allowances as needed. You may also be able to lower your tax bracket by investing in a retirement fund such as a 401k or IRA, instead of socking money away in a regular savings account, which will earn you very little interest, if any, and no tax deductions. (However, having an accessible emergency fund of at least 3 -6 months salary, in a regular savings account, could be just as important as lowering your tax bracket. So keep that in mind.) And when you are ready to invest your money in a tax-deductible IRA, invest as early as possible. Although you can wait until April of the following year to still get the tax deduction, your money will start growing faster the earlier you invest it!
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