Daily Dupaco

Thursday, March 17, 2011

Uncle Sam: thanks for the interest-free loan

If you're receiving a tax refund this year from the government, you may want to rethink your withholding.

The average refund last year was $3,003. Rather than giving an interest-free loan to Uncle Sam, file a new Form W-4 with your employer and have less money withheld from your salary, putting more money in your pocket throughout the year (Center for Personal Finance).

Make the change now - putting it off only increases the likelihood that it won't get done.

Haven't yet filed your taxes? Check out the Center for Personal Finance's full list of money-saving tax tips, which include the following:

  • Don't overlook a single tax credit. A credit is better than a deduction because it cuts your actual tax bill. Examples include the child tax credit and first-time homebuyer tax credit. Review the list of tax credits, organized neatly by category.
  • E-file if possible, and with Free-file if you're eligible. If your income is less than $58,000, visit irs.gov for information about 20 tax software companies that make their products available for free; some also support state tax returns for free. If you make more than $58,000 and are comfortable preparing your own tax return, consider Free File Fillable Forms.

Also note that you'll have an extra three days to file this year, as the District of Columbia's observance of Emancipation Day falls on the traditional tax deadline of April 15, pushing the tax deadline to April 18. Taxpayers who request more time to file will have until Oct. 17 to submit their returns.

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