10 Reasons to Stop Receiving Federal Income Tax Refund
The National Foundation for Credit Counseling (NFCC) February online poll revealed that a strong majority of respondents intentionally plan to receive a federal income tax refund. "The findings suggest that receiving an income tax refund has become standard operating procedure for some people, as 2014 is the second year in a row that the majority of NFCC poll respondents confirmed their preference toward the once per year windfall," said Gail Cunningham, spokesperson for the NFCC. People may argue that overpaying Uncle Sam each pay period is the only way they can save, as their withholding has become a method of forced savings. However, that reasoning pales when stacked against the many benefits of having an accurate amount withheld from their check each pay period. The NFCC encourages taxpayers to consider the following 10 reasons to discontinue the practice of receiving a federal income tax refund:
"Often the very people who celebrate receiving a refund are those who are most in need of extra money in their pocket each month," continues Cunningham. "Living paycheck-to-paycheck, people often fall behind on important priorities such as rent or vehicle payments. With the refund in recent years averaging close to $3,000, an extra $250 every month could mean the difference between eviction and repossession, yet many people remain reluctant to forego their habit of receiving refunds." To calculate the proper number of withholding allowances, go to www.IRS.gov and type the words "withholding calculator" into the search bar. After determining the appropriate number of allowances, complete a new W-4 if necessary. Workers are allowed to submit an updated W-4 to their employer at any time during the year. If the adjusted allowances result in a higher paycheck, make a conscious decision regarding how to best allocate the extra money. Cunningham notes that whether the objective is to save money, catch up on past-due bill payments, donate to charity or invest, without a solid plan to execute against, the money will likely not serve its intended purpose. Sources: www.SharpenToday.org, www.agudicehoy.org. |
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