You work hard for your money and you deserve to enjoy a healthy financial lifestyle. The following article explores how to use your refund this year to make things a little easier for you in the future and to benefit you and your family over the long term.
Written by, Justin Chu, a Program Associate for the Taxpayer Opportunity Network a program of Prosperity Now, formerly CFED. “At Prosperity Now, we believe that “prosperity” starts with financial security—not being one paycheck away from financial disaster. It gains momentum with financial stability – having savings to obtain assets that build wealth, like a house or an education. And it continues with financial mobility – the opportunity to climb the economic ladder for a brighter future.”
Every year, the middle of April marks the end of the federal tax return filing season. For many Americans, that can mean seemingly endless forms, paystubs, and other paperwork. However, tax time can also be a unique opportunity for saving for your future! You can maximize tax time in three easy ways and have your tax refund work for you.
1. Put your refund into a saving account
For people claiming some of the unique tax credits that benefit hardworking families around the country such as the Earned Income Tax Credit and the Child Tax Credit, their tax refund may be the largest sum of money they will see the entire year. By opening a savings account, you can deposit a portion or all of your refund and let the amount grow over time. Luckily, you can do this using the IRS Form 8888, which will divide your refund over multiple accounts.
2. Put your refund into a savings bond
As a part of the Form 8888, you are now able to easily and seamlessly purchase Series 1 US Savings Bonds as you prepare your tax return! These 30-year bonds are backed by the United States government and they will pay you interest yearly. Bonds are a great, low-risk option to grow your savings while receiving a little bit of money each year.
3. Get your taxes prepared for free
If you make less than $53,000 a year, you can your taxes prepared at no-cost by IRS-certified volunteers in your local community! The Volunteer Income Tax Assistance (VITA) program has served millions of Americans for more than 45 years. If you qualify, you can find your local VITA program using this tool; at these VITA sites, you can find expert information to help demystify the tax code and to prepare your taxes.
If you are unable to visit a VITA site, you can also use myfreetaxes.com to prepare your taxes online for free if your household income was less than $66,000 in 2017.
These three steps are only a small sample of how you can leverage this annual process! Tax time can be confusing but you can maximize your tax return to build for a more sustainable future. Don’t delay and be sure to start your own saving story today!
Join us in celebrating America Saves Week, February 26th – March 3rd, and commit to saving!