|List By Date|
|Health Care and Entitlements|
For assistance with
interviews with CCH
You Have Your Tax Refund: Now What? CCH CompleteTax Offers Cash-allocation Ideas; Last-minute Tips for Procrastinators
(RIVERWOODS, ILL., April 3, 2008) – Spring is a time when millions of Americans are trying to decide just how to use their tax refund checks. CCH CompleteTax outlines a few suggestions – from those satisfying the desire to splurge to more practical uses that may put consumers in a better position longer term.
“It’s hard to resist the temptation to cash the check and go out and spend any refund you have coming,” said Debra Gray, product manager for CCH CompleteTax, an online tax preparation and electronic filing solution from CCH, a Wolters Kluwer business. “However, taxpayers who show some restraint will probably be in a better financial situation down the line.”
While the size of the tax refund varies and not all taxpayers receive one, the average refund is more than $2,700 so far this tax season. Add to this the tax rebate funds that many individuals will be receiving as part of the Economic Stimulus package and the dollars can really add up. So, what’s a taxpayer to do with all that cash?
- Put a Dent in Debt: On average each American has five credit cards. And Americans don’t appear shy about using their credit cards, with the Federal Reserve estimating that credit card debt rose more than 7 percent in January 2008 to more than $947 billion.
“Even if you just took a third or a half of what you received in your refund or rebate to pay down debt, that can reduce considerably the amount you are paying each month just to cover interest charges,” said Gray.
- Fortify the Nest Egg: With refunds averaging more than $2,700, it’s clear that millions of individuals are having too much of their pay withheld for taxes. Meanwhile, survey after survey reports that Americans are not saving enough for retirement. One way to solve both problems could be to instruct your employer to reduce the amount of your withholding to the appropriate level by completing a new W-4. And, then consider having your employer automatically deposit into your 401(k) account the funds that had been going to overpay your withholdings. A free W-4 calculator is available on CCH CompleteTax to help with the math.
“This is money that many people are managing to live without during the year, so diverting it to their retirement account is a great, pain-free way to build up a retirement fund,” said Gray.
- Have a Heart, or Hug a Politician: While only about 9 percent of taxpayers actually check off the box on their tax form and forward $3 for the Presidential Fund, that’s not to say Americans don’t like to give to political causes. However, if you decide to put some of your refund toward backing a political candidate, remember it’s not tax deductible and the maximum any individual can contribute is $2,300 per election, though the primary and general election are viewed as separate elections.
If you’re already looking for ways to use your 2007 refund to reduce 2008 taxes, contributions to charitable organization are tax deductible. Be certain to keep proof of your contribution; for cash this means either a bank record (e.g., cancelled check) or a written communication from the charity indicating the date and amount contributed.
- Splurge! Bye, Bye Bunny Ears, Hello Big-screen HDTV: If yours is one of the 21 million homes whose primary television set still relies on over-the-air broadcast signals, the temptation to trade in your analog set for a high-definition television may be getting stronger every day closer to the February 17, 2009 change-over to all digital. Granted, you could get a digital-to-analog converter box for around $70, with the government kicking in $40 toward the purchase. But for those viewing their tax refund as a windfall, spending a few hundred dollars – or a few thousand dollars – to treat themselves to an HDTV upgrade may be hard to resist.
- Throw a Tax Day 2008 Party: And, as long as you have that big television, why not have a party? According to the Tax Foundation, April 23 is this year’s Tax Freedom Day – the day on which U.S. taxpayers reportedly have met their tax obligations for the year. So, if you need an excuse for a party and you have income tax refund money burning a hole in your pocket, why not celebrate?
…And for the Procrastinators
Tax season isn’t over for everyone. Millions of taxpayers still need to file their tax return or file for an extension. And, many more individuals who do not owe taxes need to file a tax return in order to be eligible for the tax rebate.
Using tax software can help simplify and speed the process as the tax deadline looms. For example, taxpayers can use CCH CompleteTax to complete their tax return, generally in a matter of just a few hours, or to file for an extension if they do not have the information they need to complete their taxes before the April 15 deadline. Low-income earners or those owing no taxes but who want to file a tax return to qualify for the tax rebate can use CCH CompleteTax’s free federal tax prep version offered through the IRS Free File web site.
“Taxpayers using CompleteTax can split their refund and have it directly deposited into up to three separate accounts. This can help apply some discipline to their decision process because they are able to decide how they want to allocate their refund ahead of time instead of when they have a potentially very large check in their hands,” said Gray.
About CCH CompleteTax
CCH CompleteTax (www.CompleteTax.com), an online tax preparation and e-filing service for the do-it-yourself taxpayer, continues to set the standard when it comes to making online tax prep and e-filing easy, efficient and affordable. CCH CompleteTax offers comprehensive support to help taxpayers through each step of preparing and e-filing both federal and state income tax returns.
About CCH, a Wolters Kluwer business
CCH, a Wolters Kluwer business (CCHGroup.com) is a leading provider of tax, accounting and audit information, software and services. It has served tax, accounting and business professionals and their clients since 1913. Among its market-leading products are The ProSystem fx® Office, CorpSystem®, CCH® Tax Research NetWork™, Accounting Research Manager® and the U.S. Master Tax Guide®. CCH is based in Riverwoods, Ill.
Wolters Kluwer is a leading global information services and publishing company. Its shares are quoted on the Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. For more information, visit www.wolterskluwer.com.
-- ### --