Tax preparation help offered at Community Action
Otter Tail-Wadena Community Action Council is among the nearly 300 sites across Minnesota open to offer taxpayers free assistance with filing their tax returns.
Volunteer Income Tax Assistance (VITA) sites are free tax preparation locations where volunteers help taxpayers prepare their federal and state income and property tax returns. Senior citizens, disabled citizens, those who speak limited English and individuals with an income of $35,000 or less ($45,000 or less for families), are eligible for assistance.
"Hundreds of volunteers throughout Minnesota are generously giving their time to help other Minnesotans by making sure their taxes are filed accurately and on-time," Revenue Commissioner Ward Einess said. "This is a great resource that ensures all taxpayers pay no more and no less than they owe."
The majority of volunteer sites are run by Tax-Aide volunteers. Tax-Aide is a program supported by AARP that provides free tax information and tax return preparation for elderly, low income, non-English speaking and disabled people.
The sites are generally open now through April 15. To find a local site, its hours and dates open, and a complete list of items to bring when visiting a site, taxpayers should visit: www.taxes.state.mn.us. Taxpayers can also call 651-297-3724 or 1-800-657-3989 to search for a site by zip code. Interpreters are available at some sites. The department's website also allows taxpayers to search for a location by language.
Tax refund decisions
A tax refund is a welcome bonus. Whether it is $300 or $3,000, the way you use that money can have a real impact on your personal and financial well-being. Want a new computer? Better car? Flat screen TV? Those are nice ideas but...
Follow These Strategies:
Plan ahead before spending your refund. Without a plan, you may use the money on the first thing that comes to mind and later realize something else was more important. Planning ahead and involving the family increases the chances that you will identify all the possibilities and identify which are most important.
Devote a portion of your tax refund to build long-term financial security. Under the 2008 Farm Bill, savings for certain retirement and education savings plans will no longer be counted in determining food stamp eligibility. Money put into retirement savings may also make you eligible for the Retirement Savings Tax Credit next year.
If you are a low-to-moderate income worker you may be eligible for the Retirement Saving Tax Credit. The credit can be claimed by:
Married couples filing jointly with incomes up to $53,000 in 2008 and $55,500 in 2009.
Heads of Household with incomes up to $39,750 in 2008 and $41,625 in 2009.
Married individuals filing separately and singles with incomes up to $26,500 in 2008 and $27,750 in 2009.
Do not throw away part of your refund on loan fees. Companies that offer "quick refunds" are just giving you a high-cost, high-risk loan. (For more information on refund anticipation loans, see http://www.lawhelpmn.org/MN/index.cfm.)
Four smart uses for your tax refund
1. Pay off bills.
Your first priority should be monthly bills for needs (utilities, phone, etc.) you have gotten behind on. Prioritize your other debts so that the ones with the highest interest rate get paid off first.
2. Save for needs in the coming year.
Emergency Funds - Having money saved for emergencies can get you through small emergencies like a car repair or medical expense. If you lose your job, an emergency fund can keep you afloat until you find another income source.
Occasional Expenses - Big bills that come once a year or every few months cause huge problems for families. Avoid problems by being ready for the bills. Use your tax refund to start a special savings fund and then keep adding to it throughout the year.
Use direct deposit to receive tax refunds fast. You can split direct deposit refunds in up to three different accounts. These could be joint checking, savings, health savings, retirement, or education savings accounts. More information is available online at www.irs.gov; search for Form 8888.
3. Save for long-term goals.
You can make progress toward long-term goals using your tax refund! Small amounts add up. Adding just $500 a year into a retirement account such as an IRA can make a difference over a period of decades. Take the 'small amount' plan one step further by making a monthly contribution too. If you contribute $500/year and $25/month, earning 9% return, in 30 years you will have $113,800!
4. Save for special purchases.
Do you need a new refrigerator? Or furnace? Or...? Those purchases are valuable too. Some may be essential, while others simply add enjoyment to life.
Advanced earned income payments
How can I get part of my refund money throughout the year instead of waiting? Change your withholding allowances on Form W-4. If you receive a large refund you may be claiming too few exemptions. Talk with your payroll office at work about this.
If you have children and qualify for the Earned Income Credit, you can request to receive part of it throughout the year.
How? Ask your payroll office for Form W-5 Earned Income Credit Advance Payment Certificate.
How Much? Using IRS guidelines which estimate what your Earned Income Credit amount for the year might be, your payroll office distributes about half of that amount in your paychecks throughout the year. (Example: A worker earning between $500 and $1,200 per month might receive $60 extra in each bi-weekly paycheck.)
Workers who receive part of their Earned Income Credit in advance benefit in two ways. They can still expect a good refund check in the following year and they will also have more money throughout the year for paying bills, paying off debts, contributing to a retirement account, or just staying up-to-date.
Plan for the best use of your tax refund. Use Steps for Decision Making to make the best decision for the use of your tax refund. By you and your family carefully considering all of the options and the pros and cons of each option, you will be able to make the best decision for how to use the dollars.