Statewide Volunteer Income Tax Assistance sites offer free tax preparation
Contact J. Michael Collins, jmcollins@wisc.edu, 608-262-0369
Madison, Wis.—Tax season is the one time each year when many people get the chance to see their complete financial picture. Experts say that by closely examining your tax information, you may find ways to save money and strengthen your financial situation.
Many low-income working families and individuals qualify for tax credits and programs that can provide some relief, but accessing these resources can sometimes be challenging.
To help, Wisconsin offers a number of free tax assistance programs located in schools, community centers and public libraries, says J. Michael Collins, family and consumer economics specialist with Cooperative Extension and director of the UW-Madison’s Center for Financial Security.
“At a Volunteer Income Tax Assistance (VITA) site, you can meet with a trained volunteer who can prepare your basic income tax return for free,” says Collins. “Many VITA sites also offer free electronic filing, which means that earners with bank accounts can receive their refunds within a few days.”
You can find a list of VITA sites in Wisconsin at http://www.dor.state.wi.us/faqs/pcs/vita.html
Collins also suggests checking out FreeFile, a program sponsored by the IRS. To learn more about this, visit http://www.irs.gov/efile/article/0,,id=118986,00.html
Low-income working families, in particular, need to be aware of the Earned Income Tax Credit, or EITC. Even if you don’t owe taxes and don’t think you need to file a return, you might qualify for the credit.
Cooperative Extension Family Living specialists have developed a website to give people more information about the EITC and other tax credits, including eligibility. Information for the current tax year is available at http://fyi.uwex.edu/eitc/
If you’ll be receiving a refund this year, consider putting some of it into savings. For working families struggling to make ends meet, starting a savings account might seem out of reach. But studies suggest that when refunds exceed expectations, the odds of taxpayers saving some of the “surplus” goes up.
U.S. Savings Bonds are a good savings tool for lower-income families. “Bonds do not require a bank account and are not limited to people in ChexSystems,” says Collins. “They have the backing of the U.S. Treasury and are trusted by a wide array of consumers. Bonds have no fees and are liquid in the sense that they are easily cashed at any bank, by the Federal Reserve by mail and even online.”
Because it takes a bit of extra effort to cash in Savings Bonds, they are more likely to stay in savings than simple savings account. Some studies show people even prefer accounts that are harder to cash out.
You can buy U.S. Savings Bonds with your federal tax refund. Taxpayers can make bond purchases for themselves, add beneficiaries or co-owners, and make bond purchases for someone other than themselves by using tax form 8888.
To learn more about U.S. Savings Bonds, go to:
http://www.treasurydirect.gov/indiv/research/faq/faq_irstaxfeature.htm
But for taxpayers with an unexpectedly large refund who also have past-due bills or high interest rate debt, the best option may be to put the refund towards paying off debt.
“The best savings accounts cannot match the returns from paying off high cost debt or avoiding fees and penalties,” says Collins.
For more information about managing your family finances, contact your local UW-Extension office. You can find contact information at http://yourcountyextensionoffice.org
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