4 Tax Tips From An IRS Tax Preparer And Financial Literacy Coach
Filing your taxes with the IRS can be a breeze or a major headache depending on a variety of factors.
Places throughout the Cincinnati area, like the Center for Greater Neighborhoods in Covington, are working to educate taxpayers and lighten their workload with free tax filing sessions and financial literacy classes. WVXU spoke to Associate Director Dan Petronio - who is trained every year by the IRS to prepare taxes and also teaches financial workshops at the center - to get tips on preparing for tax season and ideas on how to use any money you may get back.
Save As Much As You Can Throughout The Year
"Overall, I would not suggest that people use their refunds for your (main) savings plan," he says. "It could be a part of your savings plan. It could be, 'I'm saving all year long and what I get here.' " The taxpayers getting their taxes done at the center are low or moderate income so he says he understands that saving can be a luxury. The center provided data that shows most people intend on paying for housing expenses, storing money in their rainy day fund or paying their utility bills.
If You Meet The Requirements, File Your Taxes For Free
If you make less than $69,000 a year, you shouldn't spend a dime on filing your federal tax returns. The IRS offers free filing options for people under that salary cap.
A ProPublica investigation discovered TurboTax found ways to make people pay for its services even after marketing those services as free, so beware.
Going to see an expert in-person ensures trained tax preparers can find the answers to all your questions. However, "paid tax preparers charge you by the form," Petronio says. "So, if you're a low-income person who may be qualifying for child tax credit, income tax credit - maybe a dependent care deduction because you're paying for childcare - each one of those is another form."
Find out if you are eligible for the IRS' free tax services here.
Actively Manage Your Tax Liabilities
If you're working multiple jobs, review how much you're withholding to make sure you aren't keeping too much or so little that you'll have to pay come tax season 2021. "Go to your human resources - whoever is handling payroll; they're supposed to help you," he says. "It's your responsibility, but they should be able to help you."
Ask Yourself: Should the IRS Hold Onto Your Money All Year?
In some cases, people want the IRS to hold their money so come tax time, they can put money in their savings, toward debt or buy something for pleasure. But if you're earning a moderate income Petronio wants you to rethink that. "Would you rather have more of that money spread out across your weekly/monthly paycheck?" he asks.
Petronio feels differently about giving a zero percent loan to the government, but he understands everyone's finances differ.
Taxes are due this year on Wednesday, April 15.