‘Tis the season: Tax season. For some of us it can mean a welcome relief, a little extra money in our pockets. For others it is added stress and work on already over loaded plates. ACTS Housing Specialist Mary Leach-Sumlin gives some great advice on what to do – and what not to do – this tax season, when it comes to tax preparation and tax refunds. Here’s what she had to say:
I had never heard of a rapid refund, so I asked Mary for clarification. She explained: “You get the refund the same day you apply for your taxes, they give you a loan against it but then when you get your refund they take your money back.” Mary suggests, even though budgets are tight, wait to get your refund check in the mail or direct deposit. That way you can maximize your refund. She explained,
“When people get rapid refunds, that’s a poor way to spend $300-500 or more of your tax refund, pretty much giving it away to get your money a few days earlier.”
We all see the commercials this time of year for various tax preparation agencies. Many of these agencies charge to prepare your taxes, or at least take a portion of your refund. Mary explains, “you can even get charged per form at some tax preparation sites, if you don’t need to – don’t use them.”
For folks who are on a tight budget, this can really be a strain. Mary suggests checking out the Volunteer Income Tax Assistance (VITA) programs in Milwaukee. If your household income is under $54,000 annually, VITA sites will prepare your tax returns for free.
Check out the City of Milwaukee’s Tax Prep Info site: http://county.milwaukee.gov/TaxPrepInfo.htm or call 211 to get information on where you can get your taxes prepared for free.
Spending your Tax Refund
A lot of us are tempted, when we have some extra spending money, to spend it right away. Mary suggests a few different ways to use your tax refund in a smart way, including:
- Open or add to a savings account
- Consider a home purchase – many ACTS families use their refund as a down payment on a foreclosed home, or for needed home repair.
The biggest pitfall, according to Mary, are the tax refund sales that come out around this time of year: “Avoid the tax refund sales—things often go on ‘sale’ during this time of year, but often times things are inflated because people know there is money out there.”
In short, plan, plan plan. Have a plan for where you can get your taxes prepared in a cost-efficient way, have a plan for how you are going to save some and spend some, and be sure to plan on avoiding those “tax refund sales.”